UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LIBRARY 


THE   LAW 


OF 


PRIVATE   CORPORATIONS 


BASED  UPON  THE  STATUTES  OF  THE  STATE  OF  WASHINGTON, 

AND  THE  DECISIONS  OF  THE  SUPREME  COURT 

OF  THE  STATE  OF  WASHINGTON, 

WITH  THE  GENERAL  CONSTITUTIONAL  AND  LEGISLATIVE 

PROVISIONS  OF  THE  STATE  OF,  WASHINGTON,  AND 

THE  FORMS  MOST  COMMONLY  USED  BY 

WASHINGTON  CORPORATIONS. 


BY 

J.     F.     DOUGLAS 

OF  THE 

SEATTLE  BAR 


TRIBUNE   PRINTING  CO.,   PUBLISHERS. 

SEATTLE,   WASHINGTON. 
1904. 


T 


Copyright    1904 
BY  J.  F.  DOUGLAS 


^ 


/> 


Printed  and  Bound  by 

The  Graham-Hickman  Co., 

Seattle. 


PREFACE. 

This  book  contains  all  the  general  constitutional  and 
legislative  provisions  of  the  State  of  Washington,  relat- 
ing to  corporations;  an  outline  of  the  law  of  corpora- 
tions, based  as  far  as  possible  upon  the  statutes  of  the 
-t  State  of  Washington  and  the  decisions  of  the  Supreme 
Court  of  the  State  of  Washington;  and  the  forms  most 
commonly  used  by  Washington  corporations. 

The  author's  design  was  to  put  the  law  of  corpora- 
tions, as  set  out  in  our  statutes  and  established  by  the 
decisions  of  our  Supreme  Court,  in  convenient  form  for 
the  use  of  lawyers,  and  at  the  same  time  in  a  form  that 
would  make  a  useful  book  for  any  person  who  wished  to 
obtain  a  working  knowledge  of  our  corporation  laws. 

Great  care  has  been  taken  to  make  the  work  accurate. 
In  the  belief  that  this  book  will  be  found  useful,  it  is  now 
submitted  to  the  public. 

J.  F.  DOUGLAS. 

April  1,  1904. 


TABLE  OF  CONTENTS 


PART  I 

CONSTITUTIONAL   AND   LEGISLATIVE   PROVISIONS. 

Constitutional  Provisions. 

§  1.  Laws  may  be  changed. 

2.  Existing  charters  not  acted  upon  of  no  force. 

3.  Charters  shall. not  be  extended. 

4.  Liability  of  stockholders. 

5.  " Corporation"  defined — Action  by  and  against. 

6.  Limitation  on  issuance  of  stock  and  bonds — Changing 

capital  stock. 

7.  Foreign  corporations. 

8.  Burdens  follow  franchise  on  alienation. 

9.  State  shall  not  loan  its  credit. 

10.  Corporate  property  liable  to  eminent  domain  by  the 

state. 

11.  Corporation  shall  not  issue  money. 

12.  Personal  liability  of  bank  officers  for  deposit  if  bank 

insolvent. 

13.  Common  carriers  subject  to  legislative  control — Car- 

riers shall  connect  and  exchange  passengers  and 
freight. 

14.  Pooling  prohibited. 

15.  Discrimination  prohibited — Short  haul — Commutation 

tickets. 


6  TABLE  OF  CONTENTS. 

§  16.  Competing  railroads  shall  not  consolidate. 

17.  Rolling  stock  personalty. 

18.  Railroad  rates — Commission. 

19.  Telephone  companies  may  construct  lines — Exchange 

of  messages — Eminent  domain. 

20.  Passes  prohibited. 

21.  Express  companies — Rights  of  railroads. 

22.  Monopolies  and  trusts  prohibited. 

Legislative  provisions. 

§  23.  Formation  of,  generally. 

24.  Articles  to  be  filed. 

25.  List  of  officers  to  be  filed. 

26.  Corporations  hereafter  organized. 

27.  Articles  as  evidence. 

28.  Powers  of  corporations. 

29.  Exercised  by  trustees. 

30.  Lapse  of  election  of  trustees. 

31.  Quorum. 

32.  First  meeting. 

33.  Stock  transferrable. 

34.  Payment  of  subscriptions — Banks. 

35.  Fiduciaries  may  vote  stock. 

36.  Stock  may  be  voted  though  pledged. 

37.  Dividends  only  from  profits. 

38.  Power  to  issue  negotiable  paper. 

39.  Holder  of  stock  as  collateral  not  liable. 

40.  Record  of  stockholders — Inspection. 

41.  False  entries. 

42.  Increase  or  decrease  of  capital  stock. 

43.  Stockholders'  meeting — Vote. 

44.  Statement  to  be  filed. 

45.  On  dissolution,  funds  held  in  trust  for  creditors. 


TABLE  OF  CONTENTS.  7 

§  46.  Dissolution. 

47.  Removal  of  office. 

48.  Corporations  validated. 

49.  Mining  corporations — Subscription  of  stock. 

50.  Act  applies  to  water  companies. 

51.  Water  company  may  condemn. 

52.  Consent  of  town. 

53.  Powers  of  foreign  corporations. 

54.  Must  file  and  record  papers. 

55.  Must  appoint  a  resident  agent. 

56.  Penalty. 

57.  Act  does  not  apply  to  companies  now  doing  business. 

58.  County  assessor  shall  report. 

59.  County  auditor's  report  to  state  auditor. 

60.  Fees. 

61.  Agent's  liability. 

62.  County  officers'  liability. 

63.  Water  power  companies  may  condemn. 

64.  Preliminary  survey. 

65.  Usual  procedure. 

66.  Corporations  prior  to  1872  may  hold  property. 

67.  Corporations  prior  to  1862  may  make  and  secure  debts. 

68.  Laborer's  lien  on  property  of  corporation. 

69.  Notice  of  claim. 

70.  Service  of  summons. 

71.  Foreclosure  of  lien. 

72.  Payment  by  receiver. 

73.  Penalty  for  person  failing  to  give  list. 

74.  Fee  for  corporate  articles. 

75.  Supplemental  articles. 

76.  Certified  copies. 
.  77.  Folio  charge. 

78.  Annual  tax — Penalty. 

79.  Certain  corporations  excepted. 


TABLE  OF  CONTENTS. 

§  80.     Duplication  of  corporate  entitlements,  an  act  to  pre- 
vent. 

81.  Stockholders  in  corporations,  an  act  to  protect. 

82.  Acknowledgement,   certificate  of,   an  instrument  by 

corporation. 

83.  Tax,  how  to  be  paid,  on  corporate  stock. 

84.  Agent  of  corporation  to  make  list. 

85.  Payment  by  corporation. 

86.  Tax  a  lien — Foreclosure. 

87.  Who  may  serve  summons. 

88.  Manner  of  service. 

89.  Service  of  summons  on  receiver. 

90.  Service  on  defunct  corporation. 

91.  Service  by  publication. 

92.  Information  against  usurpation  of  public  functions. 

93.  Who  may  file  information. 

94.  Judgment  of  ouster  of  franchise  or  office  in  corpora- 

tion— Costs. 

95.  Remedy  against  usurpers  of  corporate  rights. 

96.  Alien  ownership  of  lands. 

97.  Fraternal  societies — Agent  in  this  state. 

98.  Nonresident  insurance  companies  to  file  power  of  at- 

torney. 

99.  Private  corporation  may  be  sued  where  served  or 

where  it  has  office. 
100.    Appointment  of  receiver. 


TABLE  OF  CONTENTS. 


PART  II 

THE   LAW   OF  PRIVATE   CORPORATIONS. 


CHAPTER   I. 

OBJECTS  AND  ADVANTAGES  OF  INCORPORATION. 

§  101.  To  obtain  capital. 

102.  To  obtain  unity  of  action. 

103.  To  avoid  casualty. 

104.  To  avoid  liability. 

105.  To  expedite  business. 


CHAPTER  H. 

CREATION  OF  CORPORATIONS. 

106.  Power  to  create. 

107.  Method  of  creation. 

108.  Corporate  name. 

109.  Objects  of  incorporation. 

110.  Amount  of  capital  stock  and  number  of  shares. 

111.  Time  of  existence. 

112.  Principal  place  of  business. 
,113.  Number  and  names  of  trustees. 

114.  Amendment  of  articles  of  incorporation. 

115.  Effect  of  failure  to  comply  with  statutory  provisions. 


TABLE  OF  CONTENTS. 

CHAPTER  m. 

PROOF  OF  INCORPORATION. 


§  116.    Domestic  corporations. 
117.    Foreign  corporations. 


CHAPTER  IV. 
POWERS   OF   CORPORATIONS. 

§  118.     To  sue  and  be  sued. 
119.    To  have  a  seal. 

120.  Form  of  seal. 

121.  Use  of  seal. 

122.  By  whom  is  seal  affixed. 

123.  Effect  of  affixing  seal. 

124.  Failure  to  affix  seal. 

125.  To  acquire,  hold  or  alienate  property. 

126.  To  appoint  and  remove  officers  and  agents. 

127.  To  make  by-laws. 

128.  To  manage  its  business  and  make  regulations. 

129.  To  make  contracts. 

PARTICULAR  CONTRACTS. 

§  130.  Contracts  with  strangers. 

131.  Contracts  with  stockholders. 

132.  Contracts  with  officers  and  trustees. 

133.  Contracts  in  violation  of  law. 

134.  Right  to  borrow  money  and  issue  notes  for  author- 

ized purpose. 

135.  Right  to  borrow  money  and  issue  notes  for  unauthor- 

ized purpose. 

136.  Right  to  become  guarantors. 


TABLE  OF  CONTENTS.  H 

§  137.     Right  to  subscribe  for  or  purchase  stock  in  other 
corporations. 

138.  Right  to  purchase  its  own  stock. 

139.  Contracts  between  stockholders  prior  to  incorpora- 
tion. 

In  general. 

§  140.     Form  of  contract. 

141.  Place  of  contract. 

142.  When  powers  can  be  exercised. 

143.  Where  powers  can  be  exercised. 

144.  Kind  of  business  that  can  be  carried  on. 


CHAPTER  V. 

ULTRA  VIRES. 

§  145.     Definition  of  ultra  vires. 
146.     Reason  for  rule  of  ultra  vires. 

Rights  of  persons  affected  by  an  ultra  vires  contract. 
§  147.    Rights  of  the  state. 

148.  Rights  of  the  corporation  itself. 

149.  Rights  of  stockholders  and  creditors. 

150.  Rights  of  strangers  dealing  with  the  corporation. 


CHAPTER   VI. 

CAPITAL   STOCK. 

Subscriptions  to  capital  stock. 

§  151.     Who  can  subscribe  for  stock. 
152.     Who  can  receive  stock  subscriptions. 
•153.     Form  of  stock  subscriptions. 

154.  Consideration  for  stock  subscriptions. 

155.  Conditional  subscriptions  for  stock. 


12  TABLE  OF  CONTENTS. 

§  156.  Payment  of  stock  subscriptions. 

157.  When  can  stock  subscriptions  be  enforced. 

158.  Manner  of  enforcing  stock  subscriptions. 
In  general. 

159.  Amount  of  capital  stock. 

160.  Number  and  face  value  of  shares  of  capital  stock. 

161.  Increase  or  decrease  of  capital  stock. 

162.  The  capital  stock  is  a  trust  fund. 

163.  Overissued  stock. 


CHAPTER  VII. 

STOCKHOLDERS. 

§  164.     Who  can  be  stockholders. 

165.  How  to  become  stockholders. 

166.  Who  are  stockholders. 
Rights  of  stockholders. 

§  167.     Right  to  participate  in  management. 

168.  Right  to  inspect  books  and  records  and  remedy 

for  refusal  of  this  right. 

169.  Right  to  dividends. 
170.    Liabilities  of  stockholders. 


CHAPTER  Vin. 
TRANSFER  OR  PLEDGE  OF  SHARES. 

171.  Right  to  transfer  shares. 

172.  Manner  of  transferring  shares. 

173.  Effect  of  a  transfer  of  shares. 

174.  As  regards  a  stockholder's  creditors. 

175.  As  regards  dividends. 

176.  As  regards  the  corporation  and  the  corpo- 
ration's creditors. 


TABLE  OF  CONTENTS.  13 

§  177.     Transfers  in  violation  of  a  trust. 

178.  Remedy   for   refusal   of   corporation  to   transfer 
shares. 

179.  Contracts  for  sale  of  shares. 

180.  Pledge  of  shares.    Right  to  pledge  shares. 

181.  Effect  of  a  pledge  of  shares. 


CHAPTER  IX. 

CORPORATE  MEETINGS  AND  ELECTIONS. 
Stockholders'  meetings. 

§  182.     Notice  of  stockholders'  meetings. 

183.  Regular  or  fixed  meetings. 

184.  Special  meetings. 

185.  Time  and  place  of  meeting. 

186.  Qualifications  of  voters. 

187.  Quorum. 

188.  Elections.     Manner  of  voting. 

189.  Records  of  stockholders'  meetings. 

Trustees'  meetings. 

§  190.     Notice  of  trustees'  meetings. 

191.  First  meeting. 

192.  Regular  meetings. 

193.  Special  meetings. 

194.  Time  and  place  of  meeting. 

195.  Qualifications  of  trustees. 

196.  Manner  of  voting. 

197.  Quorum. 

198.  Election  of  officers. 

199.  Record  of  trustees'  meetings. 


14  TABLE  OF  CONTENTS. 

CHAPTER  X. 

OFFICERS  AND  AGENTS  OF  CORPORATIONS. 

§  200.  Election,  appointment  and  qualifications  of  officers. 

201.  Term  of  office.    Removal  from  office. 

202.  Compensation  of  officers  and  agents. 

203.  Powers  of  officers. 

204.  Trustees. 

205.  President. 

206.  Vice  president. 

207.  Secretary. 

208.  Treasurer. 

209.  General  manager. 

210.     Liability  of   officers   for  mismanagement. 


CHAPTER  XI. 

ACTIONS  BY  AND  AGAINST  CORPORATIONS. 

§  211.     Capacity  of  corporations  to  sue  and  liability  of  cor- 
porations to  be  sued. 

212.  Venue  of  actions  by  and  against  corporations. 

213.  Service  of  process  in  actions  against  corporations 

214.  Pleadings  in  actions  by  or  against  corporations. 

215.  Special  proceedings  against  corporations. 


CHAPTER  XII. 

LIABILITIES  OF  CORPORATIONS  FOR  TORTS 
AND  CRIMES. 

216.  Liability  of  a  corporation  for  its  torts. 

217.  Liability  of  a  corporation  for  its  crimes. 


TABLE  OF  CONTENTS.  15 

CHAPTER  XIII. 

DISSOLUTION  OF  CORPORATIONS. 

§  218.     Dissolution  by  the  expiration  of  the  time  fixed  by 
its  articles. 

219.  Dissolution  by  complying  with  the  statutory  provis- 

ions for  the  dissolution  of  corporations. 

220.  Dissolution  because  of  a  forfeiture  of  its  rights  in 

a  proceeding  by  the  state  for  a  violation  of  law  or 
other  cause. 


CHAPTER  XIV. 

INSOLVENCY  OF  CORPORATIONS. 

221.  What  facts  constitute  insolvency. 

222.  Powers  of  insolvent  corporations. 

223.  Rights  of  creditors  of  insolvent  corporations. 


CHAPTER  XV. 
FOREIGN  CORPORATIONS. 

224.  Rights  and  powers  of  foreign  corporations. 

225.  Statutory  requirements  for  foreign  corporations. 

226.  Effect  of  failure  to  comply  with  statutory  require- 
ments. 


TABLE  OP  CONTENTS. 


PART  III 
FORMS  FOR  WASHINGTON  CORPORATIONS. 

LIST  OF  FORMS. 

1.  Acknowledgment,  form  of. 

2.  Agent,  apointment  of  by  foreign  corporation. 

3.  Agent,  appointment  of  by  foreign  fraternal  insurance 

company. 

4.  Articles  of  incorporation. 

5.  Bank  statement. 

6.  By-laws. 

7.  Capital  stock,  notice  to  increase  or  decrease. 

8.  Capital  stock,  certificate  of  increase  or  decrease. 

9.  Officers,  list  of. 

10.  Power  of  attorney  to  vote  shares. 

11.  Principal  place  of  business,  notice  of  removal. 

12.  Stockholders,  notice  of  annual  meeting  of. 

13.  Stockholders,  notice  of  special  meeting  of. 

14.  Stockholders,  record  of. 

15.  Trustees,  notice  of  first  meeting  of. 

16.  Trustees,  notice  of  regular  meeting  of. 

17.  Trustees,  notice  of  special  meeting  of. 

18.  Trustees,  oath  of  office  of. 


TABLE  OF  CASES. 


Adamant  Manufacturing  Co.  v.  Wallace,  16  Wash.  614;   48  Pac. 

415 156,  223 

Allen  v.  Olympia  Light  &  Power  Co.  13  Wash.  307;  43  Pac.  55. .  .28, 

29,  34,  148,  223 

Allen  v.  Stallcup,  13  Wash.  631;  43  Pac.  884 222 

American  Bonding  &  Trust  Co.  v.  Pacific  Brewing  etc.  Co.,  33 

Wash.  043;  74  Pac.  826 180,  181 

Anderson  v.  Wallace  Lumber  &  Mnfg.  Co.,  30  Wash.  147;  70  Pac. 

247   28,  203,  209 

Atlantic  Trust  Co.  v.  Behrend,  15  Wash.  466;  46  Pac.  642 28 


B 

Baggot  v.  Turner,  21  Wash.  339;  58  Pac.  212 29,  197 

Baker  v.  King  Co.,  17  Wash.  622;  50  Pac.  481 223 

Bank  of  Commerce  v.  Galland,  14  Wash.  502;  45  Pac.  35 116 

Bank  of  California  v.  Puget  Sound  Loan,  Trust  &  Banking  Co.,  20 

Wash.  636;  56  Pac.  395 223 

Barto  v.  Nix,  15  Wash.  563;  46  Pac.  1033 45,  138 

Bash  v.  Culver  Gold  Mining  Co.,  7  Wash.  122;  34  Pac.  462. .  .24,  107,  139 
Biddle  Pur.  Co.  v.  Pt.  Townsend  Steel  Wire  &  Nail  Co.,  16  Wash. 

681;  48  Pac.  407 45,  162,  222,  223 

Birge  v.  Browning,  11  Wash.  249 ;  39  Pac.  643 157,  23 

Blair  v.  Metropolitan  Savings  Bank,  27  Wash.  192;   67  Pac.  609. 

28,  127,  149 

Blake  v.  State  Savings  Bank,  12  Wash.  619 ;  41  Pac.  909 12 

Blumauer  v.  Clock,  24  Wash.  596;  64  Pac.  844 68 

2  D 


18  TABLE  OF  CASES. 

Bramel  v.  Manring,  18  Wash.  421;  51  Pac.  1050 45 

Brigham  v.  Kenyon,  76  Fed.  Rep.  30 96 

Brooks  v.  James,  16  Wash.  335;  47  Pac.  751 208 

Brooks  v.  Skookum  Mnfg.  Co.,  9  Wash.  80;  37  Pac.  284 45,  221 

Brown  v.  Elwell,  17  Wash.  442;  49  Pac.  1068 23,  27,  142 

Brown  v.  Union  Savings  &  Loan  Association,  28  Wash.  657;  69  Pac. 

383  36,  181 

Budd  et  al.  v.  Walla  Walla  P.  &  P.  Co.,  2  Wash.  Ter.  347;  7  Pac. 

896  28,  29,  32,  132,  184,  195,  205 

Burch  v.  Taylor,  1  Wash.  245;  24  Pac.  438 34,  45,  162 

Burns  v.  Commencement  Bay  Land  etc.  Co.,  4  Wash.  558;  30  Pac. 

668,  709  29,  202 

Burrell  v.  Bennett,  20  Wash.  644;  56  Pac.  375 45,  162,  222,  223 


C 

Cameron  v.  Groveland  Imp.  Co.,  20  Wash.  169;   54  Pac.  1128;   72 

Am.  St.  26 210 

Carrigan  v.  Improvement  Co.,  6  Wash.  590;  34  Pac.  148 28,  124,  209 

Carroll  v.  Pacific  National  Bank,  19  Wash.  639;   54  Pac.  32 23, 

45,  115,  153,  221 
Carstens  etc.  v.  Leidigh  &  Haven's  Lumber  Co.,  18  Wash.  450;  51 

Pac.  1051;  63  Am.  St.  906;  39  L.  R.  A.  548 88,  213 

Cerf  Schloss  &  Co.  v.  Wallace,  14  Wash.  249;  44  Pac.  264 222 

Chehalis  Boom  Co.  v.  Chehalis  Co.,  24  Wash.  135 ;  63  Pac.  1123 78 

Citizen's  National  Bank  v.  Wintler,  14  Wash.  558;  45  Pac.  38;  53 

Am.  St.  890 209 

Cole  v.  Satsop  R.  R.  Co.,  9  Wash.  487 ;  37  Pac.  700 ;  43  Am.  St.  858, 

34,  157,  223 

Coler  v.  Allen,  114  Fed.  Rep.  611;  63  Am.  St.  872 45,  222 

Coler  v.  Eagle  Oil  &  R.  Co.,  4  Wash.  183;  29  Pac.  105 137 

Commercial  Electric  Light  &  Power  Co.  v.  Tacoma,  17  Wash.  661; 

50  Pac.  592 28,  125 


TABLE  OF  CASES. 


19 


Compton  v.  Schwabacher  Bros.  &  Co.  15  Wash.  306;  46  Pac.  338, 

45,  162,  222 

Conover  v.  Hull,  10  Wash.  673;  39  Pac.  166;  45  Am.  St.  810 45, 

162,  221,  222,  223 

Cook  v.  Moody,  18  Wash.  114;  50  Pac.  1020;  63  Am.  St.  872 45,  222 

Coolidge  v.  Schering,  32  Wash.  557;  73  Pac.  682 207 

Cox  v.  Robinson,  82  Fed.  Rep.  284 

Cunningham  v.  Spokane  Hydraulic  Co.,  18  Wash.  524;  52  Pac.  235; 

20  Wash.  450;   21  Wash  709 

Cross  v.  Johnson,  20  Wash.  124;  54  Pac.  1000 210 


D 

Daniel  v.  Gold  Hill  Mining  Co.,  28  Wash.  411;  68  Pac.  884 53,  224 

Davis  v.  Foster,  29  Wash.  363 ;  69  Pac.  1102 223 

Dearborn  v.  Washington  Savings  Bank,  18  Wash.  8;   50  Pac.  575, 

34,  36,  181 

Dearborn  Foundry  Co.  v.  Augustine,  5  Wash.  67;  31  Pac.  327 53,  226 

Deering  v.  Holcomb,  26  Wash.  588;  67  Pac.  240,  561 45 

Denny  Hotel  Co.  v.  Gilmore,  6  Wash.  152;  32  Pac.  1004 34,  157 

Denny  Hotel  Co.  v.  Schram,  6  Wash.  134;   32  Pac.  1002;   36  Am. 

St.  130  23,  28,  137,  151,  157 

Dexter  Horton  &  Co.  v.  Long,  2  Wash.  435;   27  Pac.  271;  26  Am. 

St.  867  28 

Dittenhoefer  v.  Coeur  d'Alene  Clothing  Co.,  4  Wash.  519;  30  Pac. 

660 224 

Donivan  v.  Manhattan  R.  Co.,  21  N.  Y.  Sup.  457 210 

Duggan  v.  Pacific  Boom  Co.,  6  Wash.  593;   34  Pac.  157;   36  Am. 

St.  182  28,  205,  207 

Duggan  v.  Washougal  Land  etc.  Co.,  10  Wash.  84 ;  38  Pac.  856 

Dunlap  v.  Rauch,  24  Wash.  620;  64  Pac.  807 34,  156,  213,  223 

Dyer  v.  Middle  Kittitas  Irrigation  District,  25  Wash.  80;   64  Pac. 

1009    .  


20  TABLE  OF  CASES. 

E 

Earle  v.  Seattle  L.  S.  &  E.  Ry.,  56  Fed.  Rep.  909 28 

Edison  etc.  Co.  v.  Navigation  Co.,  8  Wash.  370;  36  Pac.  260;  40 

Am.  St.  910;  24  L.  R.  A.  315 54,  226 

Elderkin  v.  Peterson,  8  Wash.  674;  36  Pac.  1089 34,  157,  158 

Elwell  v.  Puget  Sound  Ry.  Co.,  7  Wash.  487;  35  Pac.  376 28,  205 


F 

Fernald  v.  Spokane  &  B.  C.  Tel.  &  Tel.  Co.,  31  Wash.  672;  72  Pac. 

462    28,  206,  221 

Fidelity  Ins.  etc.  Co.  v.  Nelson,  30  Wash.  340;  70  Pac.  961 117 

First  Nat'l  Bank  of  Pullman  v.  Gaddis,  31  Wash.  596;  72  Pac.  460. .  210 

Fitch  v.  Applegate,  24  Wash.  25 ;  64  Pac.  147 68 

Fox  v.  Burlington  Mnfg.  Co.,  7  Wash.  391;  35  Pac.  126 140 

Frost  v.  Ainslie  Lumber  Co.,  3  Wash.  241;  28  Pac.  354 27,  116,  214 


G 

Garneau  v.  Port  Blakely  Mill  Co.,  8  Wash.  467;  36  Pac.  463 27,  214 

Gilbert  v.  Seatco,  98  Fed.  Rep.  208 28 

Gilmore  v.  H.  W.  Baker  Co.,  12  Wash.  468;  41  Pac.  124 

Glover  v.  Rochester  German  Ins.  Co.,  11  Wash.  143;  39  Pac.  380.28,  209 

Goon  Gan.  v.  Richardson,  16  Wash.  373;  47  Pac.  762 96 

Graton  &  Knight  Mnfg.  Co.  v.  Redelscheimer,  28  Wash.  370;   68 

Pac.  879 28,  148 

Griffith  v.  Burlingame,  18  Wash.  429;  51  Pac.  1059 45 

Grinsfelder  v.  Spokane  St.  Ry.,  19  Wash.  532;  53  Pac.  719;  67  Am. 

St.  739;  41  L.  R.  A.  515 125 

Groveland  Imp.  Co.  v.  Farmers'  Supply  Co.,  25  Wash.  344;  65  Pac. 

529;  87  Am.  St.  755 28 

G.  V.  B.  Mining  Co.  v.  First  Nat'l  Bank,  95  Fed.  Rep.  30 


TABLE  OF  CASES.  21 

H 

Hall  etc.  Furniture  Co.  v.  Wilbur,  4  Wash.  644 ;  30  Pac.  665 130 

Hardin  v.  Mullin,  16  Wash.  647;  48  Pac.  349 153 

Hardin  v.  Sweeney,  14  Wash.  129;  44  Pac.  138 131,  154 

Hardin  v.  White  Swan  Mining  &  Milling  Co.,  26  Wash.  583;    67 

Pac.  236   166,  181 

Hastings  v.  Anacortes  Packing  Co.,  29  Wash.  224;  69  Pac.  776. .  .23, 

125,  164,  224 

Haworth  v.  Ellwanger,  86  Fed.  54 11 

Hewitt  v.  Traders  Bank,  18  Wash.  326;  51  Pac.  468 223 

Hinchman  v.  Point  Defiance  Ry.  Co.,  14  Wash.  349;   44  Pac.  867; 

17  Wash.  399;  49  Pac.  1061 17 

Holbrook  etc.  v.  Peters  &  Miller,  8  Wash.  344;  36  Pac.  256 222 

Huggins  v.  Milwaukee  Brewing  Co.,  10  Wash.  579;  39  Pac.  152 178 

Huttig  Bros.  Mnfg.  Co.  v.  Denny  Hotel  Co.,  6  Wash.  122;  32  Pac. 

1073 '. 54,  226 


J 

Jones  v.  Western  Mnfg.  Co.,  27  Wash.  136;  67  Pac.  586 - 166,  221 

Jones  v.  Western  Mnfg.  Co.,  32  Wash.  375;  73  Pac.  359 166 


K 

Keene  Guaranty  Savings  Bank  v.  Lawrence,  32  Wash.  572;  73  Pac. 

680   82,  140,  226 

Kiggins  v.  Munday,  19  Wash.  233;  52  Pac.  855 11,  38,  45,  170 

King  v.  Ilwaco  Ry.  &  Nav.  Co.,  1  Wash.  127;   33  Pac.  924 24 

Klosterman  v.  Mason  County  etc.  R.  R.  Co.,  8  Wash.  281;  36  Pac. 

•      136 28,222 

Knapp  etc.  v.  Strand,  4  Wash.  686;  30  Pac.  1063 27,  54,  117 

Kroenert  v.  Johnston,  19  Wash.  96;  52  Pac.  605 34,  156 


22  TABLE  OF  CASES. 


Lacaff  v.  Dutch  Miller  Mining  &  Smelting  Co.,  31  Wash.  566;   72 

Pac.  122   176,  178 

Ladd  v.  Gilson,  26  Wash.  79;  66  Pac.  126 

LaFrance  Fire  Engine  Co.  v.  Town  of  Mount  Vernon,  9  Wash.  142; 

37  Pac.  287;  38  Pac.  80;  43  Am.  St.  827 53,  226 

Lancaster  Savings  Bank  v.  Elwell,  17  Wash.  446;  49  Pac.  1070 117 

Lawler,  In  re,  110  Fed.  Rep.  135 * 68 

Leslie  v.  Wilshire,  6  Wash.  282;  33  Pac.  505 45,  130,  221 

Levy  v.  Fleischner  etc.  Co.,  12  Wash.  15;  40  Pac.  384 210 

Lewiston  Water  &  Power  Co.  v.  Asotin  County,  24  Wash.  371;  64 

Pac.  544  84 

M 

McKay  v.  Elwood,  12  Wash.  579;  41  Pac.  919 23,  28,  222 

McMaster  v.  Advance  Thresher  Co.,  10  Wash.  147 ;  38  Pac.  760 212 

McRae  v.  Bowers  Dredging  Co.,  86  Fed.  Rep.  344 45 

Mallon  v.  Hyde,  76  Fed.  Rep.  388 12,  170 

Manhattan  Trust  Company  v.  Seattle  Coal  &  Iron  Co.,  19  Wash. 

493;  53  Pac.  951 28,  156 

Manhattan  Trust  Company  v.  Seattle  Coal  &  Iron  Co.,  16  Wash. 

499;  48  Pac.  333,  737 34,  156,  223 

Marble  etc.  Bank  v.  Williams,  23  Wash.  766;  63  Pac.  511 226 

Mayer  v.  Woolery,  10  Wash.  354;  39  Pac.  135 45,  222 

Miles  v.  Robertson,  5  Wash.  352;  31  Pac.  970 34,  173 

Miller  v.  Washington  Southern  Ry.  Co.,  11  Wash.  414;  39  Pac.  673, 

28,  130,  148,  205,  209 

Moody  v.  Noyes,  15  Wash.  128;  45  Pac.  732 204 

Morrison  v.  Blue  Star  Navigation  Co.,  26  Wash.  541;  67  Pac.  244;  72 

Am.  St.  26   45,  210 

Muldoon  v.  Seattle  Ry.  Co.,  10  Wash.  311;  38  Pac.  995;  38  Am.  St. 

901;  22  L,  R.  A.  794 20 

Murray  v.  Okanogan  Live  Stock  etc.  Co.,  12  Wash.  259;   40  Pac. 

942  .  .   131 


TABLE  OF  CASES.  23 

N 

Neufelder  v.  North  British  Ins.  Co.,  10  Wash.  395;  39  Pac.  110;  45 

Am.  St.  793 224 

Neufelder  v.  German  American  Ins.  Co.,  6  Wash.  336;  33  Pac.  870; 

36  Am.  St.  166;  22  L.  R.  A.  287 224 

New  York  National  Exchange  Bank  v.  Metropolitan  Savings  Bank, 

28  Wash.  553;  68  Pac.,  905 45,  222 

Northwestern  Lumber  Co.  v.  Chehalis  Co.,  24  Wash.  626;  64  Pac. 

787 

Northwestern  Warehouse  Co.  v.  Oregon  Ry.  &  Nav.  Co.,  32  Wash. 

218;  73  Pac.  388 15 

Nyman  v.  Berry,  3  Wash.  734 ;  29  Pac.  557 222 


O 

Oleson  v.  Bank  of  Tacoma,  15  Wash.  148 ;  45  Pac.  734 222 

O'Neile  v.  Ternes,  32  Wash  .528;  73  Pac.  692 132 

Oregon  Mortgage  Co.  v.  Carstens,  16  Wash.  165;  47  Pac.  421;  35 

L.  R.  A.  841 53,     96 

Osborne  v.  Columbia  etc.  Corporation,  9  Wash.  666 ;    38  Pac.  160 . .  .88,  213 


Pacific  Nat'l  Bank  v.  Pierce  County,  20  Wash.  675 ;  56  Pac.  936 84 

Parsons  v.  Tacoma  Smelting  &  Refining  Co.,  25  Wash.  492;  65 

Pac.  765 28,  31,  125,  132,  137,  144,  149,  195,  204 

Paxton  v.  Daniel,  1  Wash.  19 ;  23  Pac.  441 88 

Port  Townsend  National  Bank  v.  Port  Townsend  Gas  &  Fuel  Co., 

6  Wash.  597;  34  Pac.  155 33,  36,  172,  174,  176,  180,  181,  222 

Potvin  v.  Denny  Hotel  Co.,  26  Wash.  309;  66  Pac.  376.  .45,  210,  222,  223 

Pronger  v.  Old  National  Bank,  20  Wash.  618 ;  56  Pac.  391 148 

Puget  Sound  etc.  R.  R.  Co.  v.  Ouellette,  7  Wash.  265 ;  34  Pac.  929 158 


24  TABLE  OF  CASES. 


Ramsay  v.  Tacoma  Land  Co.,  31  Wash.  351;  71  Pac.  1024 23 

Rathbone  v.  Frost,  9  Wash.  162;  37  Pac.  298 226 

Rattlemiller  v.  Stone,  28  Wash.  104;  68  Pac.  168 209 

Realty  Co.  v.  Appolonio,  5  Wash.  437;  32  Pac.  219 53,  224 

Ridpath  v.  Sans  Poil,  etc.,  Transportation  Co.,  26  Wash.  427;  67 

Pac.  229  220 

Ridpath  v.  Spokane  County,  23  Wash.  436;  63  Pac.  261 84 

Roberts  v.  Washington  National  Bank,  9  Wash.  12 ;  37  Pac.  26 221 

Roberts  v.  Washington  National  Bank,  11  Wash.  550;  40  Pac.  225. .  222 
Roberts  v.  Washington  Water  Power  Co.,  19  Wash.  392;  53  Pac. 

664 28,  199 

Roy  &  Co.  v.  Scott  Hartley  &  Co.,  11  Wash.  399;  39  Pac.  679 130,  205 


S 

Saunders  v.  United  States  Marble  Co.,  25  Wash.  475 ;  65  Pac.  782 . . 

28,  209 

Sayward  v.  Carlson,  1  Wash.  29 ;  23  Pac.  830 88 

Sayward  v.  Gardner,  5  Wash.  247;  31  Pac.  671;  33  Pac.  389 226 

Seal  v.  Cameron,  24  Wash.  62 ;  63  Pac.  1103 214 

Seal  v.  Puget  Sound  Loan  etc.  Co.,  5  Wash.  422;  32  Pac.  214 28,  205 

Seattle  &  Mon.,  etc.,  Co.  v.  State,  7  Wash.  150;  34  Pac.  551 13 

Seattle  Crockery  Co.  v.  Haley,  6  Wash.  302;  33  Pac.  650;  36  Am.  St. 

156    130,  210 

Seattle  Trust  Co.  v.  Pitner,  18  Wash.  401;  51  Pac.  1048 23 

Security  Savings  Society  v.  Cohalan,  31  Wash.  266 ;  71  Pac.  1020 ...  130 

Sengfelder  v.  Mutual  Life  Ins.  Co.,  5  Wash.  121;  31  Pac.  428 214 

Shuey  v.  Adair,  24  Wash.  378;  64  Pac.  536 11,  37,  170,  223 

Shuey  v.  Holmes,  21  Wash.  223;  57  Pac.  818 11,  170,  223 

Shuey  v.  Holmes,  22  Wash.  193;  60  Pac.  402 38,     45 

Sievers  v.  Dalles  P.  &  A.  Navigation  Co.,  24  Wash.  302;  64  Pac. 

539  .  ..88,  213 


TABLE  OF  CASES.  25 

Sligh  v.  Shelton  Southwestern  R.  R.  Co.,  20  Wash.  16;  54  Pac.  763. . 

34,  223 

Sloan  v.  Langert,  6  Wash.  26 ;  32  Pac.  1015 210 

Sly  v.  Palo  Alto  Gold  Mining  Co.,  28  Wash.  485;  68  Pac.  871 214 

Smith  v.  Hopkins,  10  Wash.  77;  38  Pac.  854 155 

Spokane  v.  Amsterdamsch  Trustees  Kantoor,  22  Wash.  172;  60  Pac. 

141 23,  28,  29,  36,  142,  148,  153,  166,  181,  204 

Spokane  &  Idaho  Lumber  Co.  v.  Loy,  21  Wash.  501;  58  Pac.  672; 

60  Pac.  1119  27,  116 

Spokane  Truck  &  Dray  Co.  v.  Hoefer,  2  Wash.  45;  25  Pac.  1072; 

26  Am.  St.  842;  11  L.  R.  A.  689 210 

Standard  Gold  Mining  Co.  v.  Byers,  31  Wash.  100;  71  Pac.  766. .  .29, 

92,  215 

Stanford  Land  Co.  v.  Steidle,  28  Wash.  72;  68  Pac.  178 27,  116 

State  ex  rel.  Amsterdamsch  Trustees  Kantoor  v.  Superior  Court, 

15  Wash.  668;  15,  Wash.  701;  47  Pac.  31;  55  Am.  St.  907; 

37  L.  R.  A.  Ill 95,  115 

State  ex  rel.  Attorney  General  v.  Seattle  Gas  &  Electric  Co.,  28 

Wash.  488;  68  Pac.  946 92,  215,  220 

State  ex  rel.  Boardman  v.  Ball,  5  Wash.  387;  31  Pac.  975;  34  Am. 

St.  866 213 

State  ex  rel.  Grinsfelder  v.  Spokane  St.  Ry.  Co.,  19  Wash.  518;  53 

Pac.  719  125 

State  ex  rel.  Jenkins  v.  Equitable  Indemnity  Ass'n,  18  Wash.  514; 

52  Pac.  234   221 

State  ex  rel.  Mitchell  v.  Koran,  22  Wash.  197;  60  Pac.  135 29, 

92,  126,  215 

State  v.  Pittam,  32  Wash.  137;  72  Pac.  1042 27,  116 

State  ex  rel.  Smith  v.  Superior  Court,  30  Wash.  219;  70  Pac.  484. . 
State  ex  rel.  Sterling  Timber  Co.  v.  Jenkins,  22  Wash.  494;  61  Pac. 

141 78 

State  ex  rel.  Strohl  v.  Superior  Court,  20  Wash.  545;  56  Pac.  35; 

45  L.  R.  A.  177  162,  222,  223 

State  ex  rel.  Tel.  Co.  v.  Spokane,  24  Wash.  53;  63  Pac.  1116 19 


26  TABLE  OF  CASES. 

State  ex  rel.  Weinberg  v.  Pacific  Brewing  &  Malting  Co.,  21  Wash. 

451;  58  Pac.  584;  47  L.  R.  A.  208... 168,  214 

State  ex  rel.  Winston  v.  Hudson  Land  Co.,  19  Wash.  85;   52  Pac. 

574;  40  L.  R.  A.  430 96,  164 

State  ex  rel.  Winston  v.  Morrison,  18  Wash.  664 ;  52  Pac.  228 96 

Sengf elder  v.  Mutual  Life  Ins.  Co.,  5  Wash.  121;  31  Pac.  428 116 

Stewart  v.  Gould,  8  Wash.  367;  36  Pac.  277 28,  135,  162 

Stewart  v.  Walla  Walla  P.  &  P.  Co.,  1  Wash.  521;  20  Pac.  605 34, 

166,  173,  176 
Strohl  v.  Seattle  National  Bank,  25  Wash.  28;  64  Pac.  916 45,  221 

T 

Tait  v.  Piggott,  32  Wash.  345;  73  Pac.  364 37 

Theis  v.  Spokane  Falls  Gas  Light  Co.,  33  Wash.  045;  74  Pac.  1004. . .  219 
Thompson  v.  Huron  Lumber  Co.,  4  Wash.  600;  30  Pac.  741;  31  Pac. 

25  45,  220,  222,  223 

Tibbals  v.  Mt.  Olympus  Water  Co.,  10  Wash.  329;  38  Pac.  1120; 

16  Wash.  480;  48  Pac.  236 199 

Tootle  v.  First  National  Bank,  6  Wash.  181;  33  Pac.  345 28,  148 

Trowbridge  v.  Hamilton,  18  Wash.  686;  52  Pac.  328 167 

Troy  v.  Morse,  22  Wash.  280;  60  Pac.  648 34 

Turner  v.  Bailey,  12  Wash.  634;  42  Pac.  115 34,  156 

V 

Van  Brocklin  v.  Queen  City  Printing  Co.,  19  Wash.  552;  53  Pac. 

822   45,  222,  223 

Vincent  v.  Snoqualmie  Mill  Co.,  7  Wash.  566;  35  Pac.  396 28,  45,  222 

Vogel  v.  Dalles,  etc.,  Nav.  Co.,  25  Wash.  672;  64  Pac.  539 213 

W 

Wallace  v.  Oceanic  Packing  Co.,  25  Wash.  143;  64  Pac.  938 205 

Washington  Liquor  Co.  v.  Alladio  Cafe  Co.,  28  Wash.  176;  68  Pac. 

444  .  45,  223 


TABLE  OF  CASES.  27 

Washington  Mill  Co.  v.  Marks,  27  Wash.  170;  67  Pac.  565 87 

Washington  Mill  Co.  v.  Sprague  Lumber  Co.,  19  Wash.  165;  52  Pac. 

1067  28,  134,  135,  136 

Watterson  v.  Masterson,  15  Wash.  511;  46  Pac.  1041 45,  223 

West  Seattle  Land  &  Improvement  Co.  v.  Novelty  Mill  Co.,  31 

Wash.  435;  72  Pac.  71 28,  203,  205,  209 

Wheeler,  Osgood  &  Co.  v.  Everett  Land  Co.,  14  Wash.  630 ;  45  Pac. 

316 136,  144,  148,  196 

Whitman  Agricultural  Co.  v.  Strand,  8  Wash.  647;  36  Pac.  682.. 54,  226 

Wilson  v.  Book,  13  Wash.  676;  43  Pac.  939 11,  45,  170,  223 

Wilson  v.  Northern  Pac.  R.  Co.,  5  Wash.  621;  32  Pac.  468;  34  Pac. 

146    .  .  210 


Y 

Yakima  National  Bank  v.  Knipe,  6  Wash.  348;  33  Pac.  834 27,  116 

Yeaton  v.  Eagle  Oil,  etc.,  Co.,  4  Wash.  183;  29  Pac.  1051 137,  166 


Z 
Zindorf  v.  Western  American  Co.,  26  Wash.  695;  67  Pac.  355 88 


PART  I 

CONSTITUTIONAL  AND   LEGISLA- 
TIVE   PROVISIONS 


CONSTITUTIONAL  PROVISIONS. 


§  1.     Laws  may  be  changed. 

2.  Existing  charters  not  acted  upon  of  no  force. 

3.  Charters  shall  not  be  extended. 

4.  Liability  of  stockholders 

5.  "Corporation"  defined.    Action  by  and  against. 

6.  Limitation  on  issuance  of  stock  and  bonds.    Changing 

capital  stock. 

7.  Foreign  corporations. 

8.  Burdens  follow  franchise  on  alienation. 

9.  State  shall  not  loan  its  credit. 

10.  Corporate  property  liable  to  eminent  domain  by  the 

state. 

11.  Corporation  shall  not  issue  money.    Liability  of  stock- 

holders in  bank. 

12.  Personal  liability  of  bank  officers  for  deposit  if  bank 

is  insolvent. 

13.  Common  carriers  subject  to  legislative  control.     Car- 

riers shall  connect  and  exchange  passengers  and 
freight. 

14.  Pooling  prohibited. 

15.  Discrimination   prohibited.      Short   haul.      Commuta- 

tion tickets. 

16.  Competing  railroads  shall  not  consolidate. 

17.  Rolling  §tock  personalty. 

18.  Railroad  rates.    Commission. 

19.  Telephone  companies  may  construct  lines.    Exchange 

of  messages.    Eminent  domain. 


32  CONSTITUTIONAL    PROVISIONS. 

20.  Passes  prohibited. 

21.  Express  companies.    Rights  of  railroads. 

22.  Monopolies  and  trusts  prohibited. 


CONSTITUTIONAL  PROVISIONS. 

Private  corporations — Laws  may  be  changed. 

§  1.  Corporations  may  be  formed  under  general  laws, 
but  shall  not  be  created  by  special  acts.  All  laws  relating 
to  corporations  may  be  altered,  amended  or  repealed  by 
the  legislature  at  any  time,  and  all  corporations  doing 
business  in  this  state  may,  as  to  such  business,  be  regu- 
lated, limited  or  restrained  by  law. 

Article  XII,  Sec.  1,  Const. 

Existing  charters  not  acted  upon  of  no  force. 

§  2.  All  existing  charters,  franchises,  special  or  exclu- 
sive privileges,  under  which  an  actual  and  bona  fide 
organization  shall  not  have  taken  place,  and  business 
commenced  in  good  faith,  at  the  time  of  the  adoption 
of  this  constitution,  shall  thereafter  have  no  validity. 

Article  XII,  Sec.  2,  Const. 

Charters  shall  not  be  extended. 

§  3.  The  legislature  shall  not  extend  any  franchise  or 
charter,  nor  remit  the  forfeiture  of  any  franchise  or  char- 
ter of  any  corporation  now  existing,  or  which  shall  here- 
after exist  under  the  laws  of  this  state. 

Article  XII,  Sec.  3,  Const. 


CONSTITUTIONAL    PROVISIONS.  33 

Liability  of  stockholders. 

§  4.  Each  stockholder  in  all  incorporated  companies, 
except  corporations  organized  for  banking  or  insurance 
purposes,  shall  be  liable  for  the  debts  of  the  corporation 
to  the  amount  of  his  unpaid  stock  and  no  more,  and  one 
or  more  stockholders  may  be  joined  as  parties  defendant 
in  suits  to  recover  upon  this  liability. 
Article  XII,  Sec.  4,  Const. 

"Corporation"  defined — Action  by  and  against. 

§  5.  The  term  ''corporation,"  as  used  in  this  article, 
shall  be  construed  to  include  all  associations  and  joint 
stock  companies  having  any  powers  or  privileges  of  cor- 
porations not  possessed  by  individuals  or  partnerships, 
and  all  corporations  shall  have  the  right  to  sue  and  shall 
be  subject  to  be  sued,  in  all  courts,  in  like  cases  as  nat- 
ural persons. 

Article  XII,  Sec.  5,  Const. 

Limitation  on  issuance  of  stock  and  bonds — Changing  capital 
stock. 

§  6.  Corporations  shall  not  issue  stock,  except  to  bona 
fide  subscribers  therefor,  or  their  assignees;  nor  shall 
any  corporation  issue  any  bond  or  other  obligation  for 
the  payment  of  money,  except  for  money  or  property 
received  or  labor  done.  The  stock  of  corporations  shall 
not  be  increased  except  in  pursuance  of  a  general  law, 
nor  shall  any  law  authorize  the  increase  of  stock,  without 
the  consent  of  the  person  or  persons  holding  the  larger 
amount  in  value  of  the  stock,  nor  without  due  notice  of 
the  proposed  increase  having  been  previously  given  in 

3  D 


34  CONSTITUTIONAL    PROVISIONS. 

such  manner  as  may  be  prescribed  by  law.    All  fictitious 
increase  of  stock  or  indebtedness  shall  be  void. 

Article  XII,  Sec.  6,  Const. 

Foreign  corporations. 

§  7.  No  corporation  organized  outside  the  limits  of 
this  state  shall  be  allowed  to  transact  business  within  the 
state  on  more  favorable  conditions  than  are  prescribed 
by  law  to  similar  corporations  organized  under  the  laws 
of  this  state. 

Article  XII,  Sec.  7,  Const. 

Burdens  follow  franchise  on  alienation. 

§  8.  No  corporation  shall  lease  or  alienate  any  fran- 
chise, so  as  to  relieve  the  franchise  or  property  held 
thereunder  from  the  liabilities  of  the  lessor,  or  grantor, 
lessee,  or  grantee,  contracted  or  incurred  in  the  opera- 
tion, use,  or  enjoyment  of  such  franchise  or  any  of  its 
privileges. 

Article  XII,  Sec.  8,  Const. 

State  shall  not  loan  its  credit. 

§  9.  The  state  shall  not  in  any  manner  loan  its  credit, 
nor  shall  it  subscribe  to,  or  be  interested  in  the  stock  of 
any  company,  association  or  corporation. 

Article  XII,  Sec.  9,  Const. 


Corporate  property  liable  to  eminent  domain  by  the  state. 

§  10.     The  exercise  of  the  right  of  eminent  domain 
shall  never  be  so  abridged  or  construed  as  to  prevent 


CONSTITUTIONAL    PROVISIONS.  35 

the  legislature  from  taking  the  property  and  franchise 
of  incorporated  companies,  and  subjecting  them  to  pub- 
lic use  the  same  as  the  property  of  individuals. 

Article  XII,  Sec.  10,  Const. 

Corporations  shall  not  issue  money — Liability  of  stockholders 
in  bank. 

§  11.  No  corporation,  association  or  individual  shall 
issue  or  put  in  circulation  as  money  anything  but  the 
lawful  money  of  the  United  States.  Each  stockholder 
of  any  banking  or  insurance  corporation  or  joint  stock 
association  shall  be  individually  or  personally  liable, 
equally  and  ratably,  and  not  one  for  another,  for  all 
contracts,  debts  and  engagements  of  such  corporation 
or  association  accruing  while  they  remain  such  stock- 
holders to  the  extent  of  the  amount  of  their  stock  therein 
at  the  par  value  thereof  in  addition  to  the  amount  in- 
vested in  such  shares. 

Article  XII,  Sec.  11,  Const. 
Shuey  v.  Adair,  24  Wash.  378;  64  Pac.  536. 
Kiggins  v.  Munday,  19  Wash.  233;  52  Pac.  955. 
Wilson  v.  Book,  13  Wash.  676;  43  Pac.  939. 
Shuey  v.  Holmes,  21  Wash.  223;  57  Pac.  818. 
Haworth  v.  Ellwanger,  86  Fed.  54. 


Personal  liability  of  bank  officer  for  deposit  if  bank  insolvent. 

§  12.  Any  president,  director,  manager,  cashier,  or 
other  'officer  of  any  banking  institution  who  shall  receive 
or  assent  to  the  reception  of  deposits  after  he  shall  have 
knowledge  of  the  fact  that  such  banking  institution  is 


36  CONSTITUTIONAL    PROVISIONS. 

insolvent  or  in  failing  circumstances  shall  be  individually 
responsible  for  such  deposits  so  received. 

Article  XII,  Sec.  12,  Const. 

Blake  v.  State  Savings  Bank,  12  Wash.  619;  41  Pac.  909. 

Mallon  v.  Hyde,  76  Fed.  Rep.  388. 


Common  carriers  subject  to  legislative  control — Carriers  shall 
connect  and  exchange  passengers  and  freight. 

§  13.  All  railroad,  canal,  and  other  transportation 
companies  are  declared  to  be  common  carriers  and  sub- 
ject to  legislative  control.  Any  association  or  corpora- 
tion organized  for  the  purpose,  under  the  laws  of  this 
state,  shall  have  the  right  to  connect  at  the  state  line 
with  railroads  of  other  states.  Every  railroad  company 
shall  have  the  right  with  its  road,  whether  the  same  is 
now  constructed  and  or  may  hereafter  be  constructed, 
to  intersect,  cross  or  connect  with  any  other  railroad, 
and  when  such  railroads  are  of  the  same  or  similar  gauge, 
they  shall  at  all  crossings  and  at  all  points,  where  a  rail- 
road shall  begin  or  terminate  at  or  near  any  other  rail- 
road, form  proper  connections  so  that  the  cars  of  any 
such  railroad  companies  may  be  speedily  transferred 
from  one  railroad  to  another.  All  railroad  companies 
shall  receive  and  transport  each  the  other's  passengers, 
tonnage,  and  cars  without  delay  or  discrimination. 

Article  XII,  Sec.  13,  Const. 

Seattle,  etc.,  Ry.  v.  State,  7  Wash,  150;  34  Pac.  551. 


Pooling  prohibited. 

§  14.    No  railroad  company  or  other  common  carrier 
shall  combine  or  make  any  contract  with  the  owners  of 


CONSTITUTIONAL    PROVISIONS.  37 

any  vessel  that  leaves  port  or  makes  port  in  this  state, 
or  with  any  common  carrier,  by  which  combination  or 
contract  the  earnings  of  one  doing  the  carrying  are  to 
be  shared  by  the  other  not  doing  the  carrying. 

Article  XII,  Sec.  14,  Const. 

Discrimination  prohibited — Short  haul — Commutation  tickets. 

§  15.  No  discrimination  in  charges  or  facilities  for 
transportation  shall  be  made  by  any  railroad  or  other 
transportation  company  between  places  or  persons,  or 
in  the  facilities  for  the  transportation  of  the  same  classes 
of  freight  or  passengers  within  this  state,  or  coming 
from  or  going  to  any  other  state.  Persons  and  property 
transported  over  any  railroad  or  by  any  other  trans- 
portation company,  or  individual,  shall  be  delivered  at 
any  station,  landing,  or  port  at  charges  not  exceeding 
the  charges  for  the  transportation  of  persons  and  prop- 
erty of  the  same  class,  in  the  same  direction  to  any  more 
distant  station,  port,  or  landing.  Excursion  and  com- 
mutation tickets  may  be  issued  at  special  rates. 

Article  XII,  Sec.  15,  Const. 

Northwestern  Warehouse  Co.  v.  Oregon  Ry.  &  Nav.  Co.,  32  Wash.  218; 
73  Pac.  388. 


Competing  railroads  shall  not  consolidate. 

§  16.  No  railroad  corporation  shall  consolidate  its 
stock,  property  or  franchise  with  any  other  railroad  cor- 
poration owning  a  competing  line. 

Article  XII,  Sec.  16,  Const. 


38  CONSTITUTIONAL    PROVISIONS. 

Rolling  stock  personalty. 

§  17.  The  rolling  stock  and  other  movable  property 
belonging  to  any  railroad  company  or  corporation  in 
this  state  shall  be  considered  personal  property,  and 
shall  be  liable  to  taxation  and  to  execution  and  sale  in 
the  same  manner  as  the  personal  property  of  individuals 
and  such  property  shall  not  be  exempted  from  execution 
and  sale. 

Article  XII,  Sec.  17,  Const. 

Cited,  Hinchman  v.  Point  Defiance  Ry.  Co.,  14  Wash.  349 ;  44  Pac.  1867. 

Cited  in  second  appeal,  Id.,  17  Wash.  399  (401) ;  49  Pac.  1061. 

Railroad  rates — Commission. 

§  18.  The  legislature  shall  pass  laws  establishing  rea- 
sonable maximum  rates  of  charges  for  the  transporta- 
tion of  passengers  and  freight,  and  to  correct  abuses 
and  to  prevent  discrimination  and  extortion  in  the  rates 
of  freight,  and  passenger  tariffs  on  the  different  rail- 
roads and  other  common  carriers  in  the  state,  and  shall 
enforce  such  laws  by  adequate  penalties.  A  railroad  and 
transportation  commission  may  be  established  and  its 
powers  and  duties  fully  defined  by  law. 

Article  XII,  Sec.  18,  Const. 

Telephone  companies  may  construct  lines — Exchange  of  mes- 
sages— Eminent  domain. 

§  19.  Any  association  or  corporation,  or  the  lessees 
or  managers  thereof,  organized  for  the  purpose,  or  any 
individual  shall  have  the  right  to  construct  and  maintain 
lines  of  telegraph  and  telephone  within  this  state,  and 
said  companies  shall  receive  and  transmit  each  other's 


CONSTITUTIONAL    PROVISIONS.  39 

messages  without  delay  or  discrimination,  and  all  of 
such  companies  are  hereby  declared  to  be  common  car- 
riers and  subject  to  legislative  control.  Eailroad  cor- 
porations organized  or  doing  business  in  this  state  shall 
allow  telegraph  and  telephone  corporations  and  com- 
panies to  construct  and  maintain  telegraph  lines  on  and 
along  the  rights  of  way  of  such  railroads  and  railroad 
companies,  and  no  railroad  corporation  organized  or 
doing  business  in  this  state  shall  allow  any  telegraph 
corporation  or  company  any  facilities,  privileges  or  rates 
for  transportation  of  men  or  material  or  for  repairing 
their  lines  not  allowed  to  all  telegraph  companies.  The 
right  of  eminent  domain  is  hereby  extended  to  all  tele- 
graph and  telephone  companies.  The  legislature  shall, 
by  general  law  of  uniform  operation,  provide  reasonable 
regulations  to  give  effect  to  this  section. 

Article  XII,  Sec.  19,  Const. 

State  ex  rel.  Tel.  Co.  v.  Spokane,  24  Wash.  53;  63  Pac.  1116. 


Passes  prohibited. 

§  20.  No  railroad  or  other  transportation  company 
shall  grant  free  passes,  or  sell  tickets  or  passes  at  a 
discount,  other  than  is  sold  to  the  public  generally,  to 
any  member  of  the  legislature,  or  to  any  person  holding 
any  public  office  within  this  state.  The  legislature  shall 
pass  laws  to  carry  this  provision  into  effect. 

Article  XII,  Sec.  20,  Const. 

Muldoon  v.  Seattle  Ry.  Co.,  10  Wash.  311;  38  Pac.  995;  38  Am.  St. 
901;  22  L.  R.  A.  794. 


Express  companies — Rights  on  railroads. 

§  21.    Eailroad  companies  now  or  hereafter  organized 


40  CONSTITUTIONAL    PROVISIONS. 

or  doing  business  in  this  state,  shall  allow  all  express 
companies  organized  or  doing  business  in  this  state  trans- 
portation over  all  lines  of  railroad  owned  or  operated  !>y 
such  railroad  companies  upon  equal  terms  with  any  other 
express  company,  and  no  railroad  corporation  organized 
or  doing  business  in  this  state  shall  allow  any  express 
corporation  or  company  any  facilities,  privileges  or  rates 
for  transportation  of  men  or  materials  or  property  car- 
ried by  them  or  for  doing  the  business  of  such  express 
companies  not  allowed  to  all  express  companies. 

Article  XXI,  Sec.  21,  Const. 

Monopolies  and  trusts  prohibited. 

§  22.  Monopolies  and  trusts  shall  never  be  allowed  in 
this  state,  and  no  incorporated  company,  copartnership, 
or  association  of  persons  in  this  state  shall  directly  or 
indirectly  combine  or  make  any  contract  with  any  other 
incorporated  company,  foreign  or  domestic,  through  their 
stockholders,  or  the  trustees  or  assignees  of  such  stock- 
holders, or  with  any  copartnership  or  association  of  per- 
sons, or  in  any  manner  whatever  for  the  purposes  of 
fixing  the  price  or  limiting  the  production  or  regulating 
the  transportation  of  any  product  or  commodity.  The 
legislature  shall  pass  laws  for  the  enforcement  of  this 
section  by  adequate  penalties,  and  in  case  of  incorporated 
companies,  if  necessary  for  that  purpose,  may  declare  a 
forfeiture  of  their  franchise. 

Article  XXI,  Sec.  22,  Const. 


LEGISLATIVE  PROVISIONS. 

§  23.  Formation  of,  generally. 

24.  Articles  to  be  filed. 

25.  List  of  officers  to  be  filed. 

26.  Corporations  hereafter  organized. 

27.  Articles  as  evidence. 

28.  Powers  of  corporations. 

29.  Exercised  by  trustees. 

30.  Lapse  of  election  of  trustees. 

31.  Quorum. 

32.  First  meeting. 

33.  Stock  transferable. 

34.  Payment  of  subscriptions — Banks. 

35.  Fiduciaries  may  vote  stock. 

36.  Stock  may  be  voted  though  pledged. 

37.  Dividends  only  from  profits. 

38.  Power  to  issue  negotiable  paper. 

39.  Holder  of  stock  as  collateral  not  liable. 

40.  Record  of  stockholders — Inspection. 

41.  False  entries. 

42.  Increase  or  decrease  of  capital  stock. 

43.  Stockholders '   meeting — Vote. 

44.  Statement  to  be  filed. 

45.  On  dissolution,  funds  held  in  trust  for  creditors. 
•  46.  Dissolution. 

47.  Removal  of  office. 

48.  Corporations  validated. 


42  LEGISLATIVE  PROVISIONS. 

§  49.  Mining  corporations — Subscription  of  stock. 

50.  Act  applies  to  water  companies. 

51.  Water  company  may  condemn. 

52.  Consent  of  town. 

53.  Powers  of  foreign  corporations. 

54.  Must  file  and  record  papers. 

55.  Must  appoint  a  resident  agent. 

56.  Penalty. 

57.  Act  does  not  apply  to  companies  now  doing  business. 

58.  County  assessor  shall  report. 

59.  County  auditors  report  to  state  auditors. 

60.  Fees. 

61.  Agent's  liability. 

62.  County  officers'  liability. 

63.  Water  power   companies  may   condemn. 

64.  Preliminary  survey. 

65.  Usual  procedure. 

66.  Corporations  prior  to  1872  may  hold  property. 

67.  Corporations  prior  to   1862  may  make   and  secure 

debts. 

68.  Laborer's  lien  on  property  of  corporation. 

69.  Notice  of  claim. 

70.  Service  of  summons. 

71.  Foreclosure  of  lien. 

72.  Payment  by  receiver. 

73.  Penalty  for  person  failing  to  give  list. 

74.  Fee  for  corporate  articles. 

75.  Supplemental  articles. 

76.  Certified  copies. 

77.  Folio  charge. 

78.  Annual  tax — Penalty. 

79.  Certain  corporations  excepted. 

80.  Duplication  of  corporate  entitlements — An  act  to  pre- 

vent. 


LEGISLATIVE  PROVISIONS.  43 

| 

§  81.     Stockholders  in  corporations — An  act  to  protect. 

82.  Acknowledgement — Certificate  of — An  instrument  by 

corporation. 

83.  Tax — How  to  be  paid  on  corporate  stock. 

84.  Agent  of  corporation  to  make  list. 

85.  Payment  by  corporation. 

86.  Tax  a  lien — Foreclosure. 

87.  Who  may  serve  summons. 

88.  Manner  of  service. 

89.  Service  of  summons  on  receiver. 

90.  Service  on  defunct  corporation. 

91.  Service  by  publication. 

92.  Information  against  usurpation  of  public  functions. 

93.  Who  may  file  information. 

94.  Judgment  of  ouster  of  franchise  or  office  in  corpora- 
tion— Costs. 

95.  Remedy  against  usurpers  of  corporate  rights. 

96.  Alien  ownership  of  lands. 

97.  Fraternal  societies — Agent  in  this  state. 

98.  Non-resident  insurance  companies  to  file  power  of  at- 

torney. 

99.  Private  corporation  may  be  sued  where  served  or 

where  it  has  an  office. 
100.     Appointment  of  receiver. 

Formation  of,  Generally. 

§  23.  Corporations  for  manufacturing,  mining,  mill- 
ing, wharfing  and  docking,  mechanical,  banking,  mercan- 
tile, improvement  and  building  purposes,  or  for  the  build- 
ing, equipping  and  managing  water-flumes  for  the  trans- 
portation of  wood  and  lumber,  or  for  the  purpose  of 
building,  equipping  and  running  railroads,  or  construct- 
ing canals,  or  irrigating  canals,  or  engaging  in  any  other 


44  LEGISLATIVE  PROVISIONS. 

species  of  trade  or  business,  may  be  formed  according  to 
the  provisions  of  this  chapter ;  such  corporations  and  the 
members  thereof  being  subject  to  all  the  conditions  and 
liabilities  herein  imposed,  and  to  none  others :  Provided, 
that  no  such  corporation  shall  commence  business  or  in- 
stitute proceedings  to  condemn  land  for  corporate  pur- 
poses until  the  whole  amount  of  its  capital  stock  has  been 
subscribed:  And  Provided  further,  that  the  provisions 
of  the  foregoing  proviso  shall  not  apply  to  corporations 
engaged  exclusively  in  loaning  money  on  real  estate  nor 
to  corporations  engaged  exclusively  in  raising  money 
from,  and  loaning  or  repaying  it  to,  their  own  members, 
and  which  confine  their  loaning  and  business  operations 
wholly  to  the  counties  of  their  principal  place  of  busi- 
ness, respectively,  and  to  the  counties  adjacent  and  ad- 
joining thereto. 

P.  C.  §  7053. 

B.  C.  §  4250. 

Carroll  v.  Pacific  Nat.  Bank,  19  Wash.  639;  54  Pac.  32. 

Seattle  Trust  Co.  v.  Pitner,  18  Wash.  401;  51  Pac.  1048. 

Ramsey  v.  Tacoma  Land  Co.,  31  Wash.  351;  71  Pac.  1024. 

Hastings  v.  Anacortes  Packing  Co.,  29  Wash.  224;  69  Pac.  776. 

Denny  Hotel  Co.  v.  Schram,  6  Wash.  134;  32  Pac.  1002;  36  Am.  St.  130. 

Birge  v.  Browning,  11  Wash.  249;  39  Pac.  643. 

Spokane  v.  Amsterdamsch,  etc.,  22  Wash.  172;  60  Pac.  141. 

McKay  v.  Elwood,  12  Wash.  579;  41  Pac.  919. 

Brown  v.  Elwell,  17  Wash.  442;  49  Pac.  1068. 

Articles  to  be  filed. 

§  24.  Any  two  or  more  persons,  who  may  desire  to 
form  a  company  for  one  or  more  of  the  purposes  specified 
in  the  preceding  section,  shall  make  and  subscribe  written 
articles  of  incorporation  in  triplicate  and  acknowledge 
the  same  before  any  officer  authorized  to  take  the  acknowl- 


LEGISLATIVE  PROVISIONS.  45 

edgement  of  deeds,  and  file  one  of  such  articles  in  the 
office  of  the  secretary  of  state,  and  another  in  the  office 
of  the  county  auditor  of  the  county  in  which  the  prin- 
cipal place  of  business  of  the  company  is  intended  to  be 
located,  and  retain  the  third  in  the  possession  of  the  cor- 
poration. Said  articles  shall  state  the  corporate  name  of 
the  company,  the  object  for  which  the  same  shall  be 
formed,  the  amount  of  its  capital  stock,  the  time  of  its 
existence,  not  to  exceed  fifty  years,  the  number  of  shares 
of  which  the  capital  stock  shall  consist,  the  number  of 
trustees  and  their  names,  who  shall  manage  the  concerns 
of  the  company  for  such  length  of  time  (not  less  than 
two,  nor  more  than  six  months)  as  may  be  designated  in 
such  certificate,  and  the  name  of  the  city,  town  or  locality 
and  county  in  which  the  principal  place  of  business  of 
the  company  is  to  be  located.  Amendments  may  be  made 
to  the  articles  of  incorporation  by  supplemental  articles, 
executed  and  filed  the  same  as  the  original  articles. 

P.  C.  §  7054. 

B.  C.  §  4251. 

1  H.  C.  §  1498. 

Bash  v.  Culver  Gold  Mining  Co.,  7  Wash.  122;  34  Pac.  462. 

King  v.  Ilwaco  Ry.  &  Nav.  Co.,  1  Wash.  127;  23  Pac.  924. 


List  of  officers  to  be  filed. 

§  25.  Every  corporation  heretofore  organized  under 
the  laws  of  the  Territory  or  State  of  Washington  and 
every  corporation  which  may  hereafter  be  organized 
under  the  laws  of  this  state,  shall,  on  or  before  the  second 
Tuesday  of  January  of  each  year,  and  at  such  other  times 
as  such  corporation  may  elect  so  to  do,  file  with  the  coun- 
ty auditor  of  the  county  in  which  such  corporation  has  its 
principal  place  of  business,  a  statement,  sworn  to  by  its 


46  LEGISLATIVE  PROVISIONS. 

president  and  attested  by  its  secretary  and  sealed  with 
its  corporate  seal,  containing  a  list  of  all  its  officers  and 
their  respective  titles  of  office,  names  and  addresses,  and 
the  term  of  office  for  which  they  have  been  chosen. 

Laws  '95,  p.  355. 
P.  C.  §  7055. 
B.  C.  §  4259. 

Corporations  hereafter  organized. 

§  26.  Every  corporation  which  shall  be  hereafter  or- 
ganized under  the  laws  of  this  state  shall,  within  thirty 
days  after  it  shall  have  filed  its  certificate  of  incorpora- 
tion with  the  county  auditor  of  the  county  in  which  it 
has  its  principal  place  of  business,  file  with  such  county 
auditor  a  statement,  sworn  to  by  its  president  and  at- 
tested by  its  secretary  and  sealed  with  its  corporate  seal, 
containing  a  list  of  all  of  its  officers  and  their  respective 
titles  of  office,  names  and  addresses,  and  the  term  of  office 
for  which  they  have  been  chosen. 

P.  C.  §  7056. 
B.  C.  §  4260. 

Articles  as  evidence. 

§  27.  A  copy  of  any  certificate  of  incorporation  filed 
in  pursuance  of  this  act  and  certified  by  the  auditor  of 
the  county  in  which  it  is  filed,  or  his  deputy,  or  by  the 
secretary  of  state,  shall  be  received  in  all  the  courts  and 
places  as  prima  facie  evidence  of  the  facts  therein  stated. 

P.  C.  §  7057. 

B.  C.  §  4252. 

1  H.  C.  §  1499. 

State  v.  Pittam,  32  Wash.  137;  72  Pac.  1042. 


LEGISLATIVE     PROVISIONS  47 

Spokane  &  Idaho  Lumber  Co.  v.  Loy,  21  Wash.  501;  58  Pac.  672;  60 
Pac.  1119. 

Knapp,  Burrell  &  Co.  v.  Strand,  4  Wash.  686;  49  Pac.  1063. 
Brown  v.  Elwell,  17  Wash.  442;  49  Pac.  1068. 
Frost  v.  Ainslie  Lumber  Co.,  3  Wash.  241;  28  Pac.  354. 
Yakima  Nat.  Bank  v.  Knipe,  6  Wash.  348;  33  Pac.  834. 
Garneau  v.  Port  Blakeley  Mill  Co.,  8  Wash.  467;  36  Pac.  463. 
Stanford  Land  Co.  v.  Steidle,  28  Wash.  72;  68  Pac.  178. 


Powers  of  the  corporation. 

§  28.  When  the  certificate  shall  have  been  filed  the 
persons  who  shall  have  signed  and  acknowledged  the 
same,  and  their  successors,  shall  be  a  body  corporate  and 
politic  in  fact  and  in  name,  by  the  name  stated  in  their 
certificate,  and  by  their  corporate  name  have  succession 
for  the  period  limited*,  and  shall  have  power : 

1.  To  sue  and  be  sued  in  any  court  having  competent 
jurisdiction. 

2.  To  make  and  use  a  common  seal  and  to  alter  the 
same  at  pleasure. 

3.  To  purchase,  hold,  mortgage,  sell  and  convey  real 
and  personal  property. 

4.  To  appoint  such  officers,  agents,  and  servants  as 
the  business  of  the  corporation  shall  require;  to  define 
their  powers,  prescribe  their  duties,  and  fix  their  compen- 
sation. 

5.  To  require  of  them  such  security  as  may  be  thought 
proper  for  the  fulfillment  of  their  duties,  and  to  remove 
them  at  will,  except  that  no  trustee  shall  be  removed  from 
office  unless  by  a  vote  of  two-thirds  of  the  stockholders 
as  hereinafter  provided. 


48  LEGISLATIVE     PROVISIONS 

6.  To  make  by-laws  not  inconsistent  with  the  laws  of 
the  congress  of  the  United  States,  and  of  this  state. 

7.  The  management  of  its  property,  the  regulation  of 
its  affairs,  the  transfer  of  its  stock,  and  for  carrying  on 
all  kinds  of  business  within  the  objects  and  purposes  of 
the  company,  as  expressed  in  the  articles  of  incorpora- 
tion. 

P.  C.  §  7058;  B.  C.  §  4230;  1  H.  C.  1500. 

Denny  Hotel  Co.  v.  Schram,  6  Wash.  134 ;  32  Pac.  1002 ;  36  Am.  St.  130. 

Parsons  v.  Tacoma  Smelting,  etc.,  Co.,  25  Wash.  492;  65  Pac.  765. 

Stewart  v.  Gould,  8  Wash.  367;  36  Pac.  277. 

Saunders  v.  United  States  Marble  Co.,  25  Wash.  475;  65  Pac.  782. 

Graton  &  Knight  Mnfg.  Co.  v.  Redelsheimer,  28  Wash.  370;  68  Pac. 
879. 

Blair  v.  Metropolitan  Savings  Bank,  27  Wash.  192;  67  Pac.  609. 

Groveland  Imp.  Co.  v.  Farmers'  Supply  Co.,  25  Wash.  344;  65  Pac.  529; 
87  Am.  St.  755. 

Anderson  v.  Wallace  Lumber  &  Mfg.  Co.,  30  Wash.  147;  70  Pac.  247. 

Dexter  Horton  &  Co.  v.  Long,  2  Wash.  435;  27  Pac.  271;  26  Am.  St. 
867. 

Seal  v.  Puget  Sound  Loan,  etc.,  Co.,  5  Wash.  422;  32  Pac.  214. 

Tootle  v.  First  Nat.  Bank,  6  Wash.  181;  33  Pac.  345. 

Duggan  v.  Pacific  Boom  Co.,  6  Wash.  593;  34  Pac.  157;  36  Am.  St.  182. 

Carrigan  v.  Port  Crescent  Imp.  Co.,  6  Wash.  590;  34  Pac.  148. 

Elwell  v.  Puget  Sound,  etc.,  Ry.,  7  Wash.  487;  35  Pac.  376. 

Vincent  v.  Snoqualmie  Mill  Co.,  7  Wash.  566;  35  Pac.  396. 

Roberts  v.  Washington  Water  Power  Co.,  19  Wash.  392;  53  Pac.  664. 

Atlantic  Trust  Co.  v.  Behrend,  15  Wash.  466;  46  Pac.  642. 

Allen  v.  Olympia  L.  &  P.  Co.,  13  Wash.  307;  43  Pac.  55. 

Glover  v.  Rochester  German  Ins.  Co.,  11  Wash.  143;  39  Pac.  380. 

Miller  v.  Washington  So.  Ry.  Co.,  11  Wash.  414;  39  Pac.  673. 

Fernald  v.  Spokane,  etc.,  Co.,  31  Wash.  672;  72  Pac.  462. 

West  Seattle  L.  &  I.  Co.  v.  Novelty  Mill  Co.,  31  Wash.  435;  72  Pac.  71. 

Manhattan  Trust  Co.  v.  Seattle  Coal  &  Iron  Co.,  19  Wash.  493;  53 
Pac.  951. 

McKay  v.  Elwood,  12  Wash.  579;  41  Pac.  919. 

Spokane  v.  Amsterdamsch,  etc.,  22  Wash.  172;  60  Pac.  141. 


LEGISLATIVE     PROVISIONS  49 

Klosterman  v.  Mason  County,  etc.,  R.  R.  Co.,  8  Wash.  281 ;  36  Pac.  13€. 

Washington  Mill  Co.  v.  Sprague  Lumber  Co.,  19  Wash.  165;  52  Pac. 
1067. 

Com'l  Electric  L.  &  P.  Co.  v.  Tacoma,  17  Wash.  661;  50  Pac.  592. 

Budd  et  al.  v.  Walla  Walla  Printing  &  Pub.  Co.,  2  W.  T.  347;  7  Pac. 
896. 

Gilbert  v.  Seates  Mfg.  Co.,  98  Fed.  Rep.  208. 

Earle  v.  Seattle  L.  S.  &  E.  Ry.,  56  Fed.  Rep.  909. 


Exercised  by  trustees. 

§  29.  The  corporate  powers  of  a  corporation  shall  be 
exercised  by  a  board  of  not  less  than  two  trustees,  who 
shall  be  stockholders  in  the  company,  and  at  least  one 
of  whom  shall  be  a  resident  of  the  State  of  Washington, 
and  a  majority  of  them  citizens  of  the  United  States,  who 
shall,  before  entering,  upon  the  duties  of  their  office,  re- 
spectively take  and  subscribe  to  an  oath,  as  provided  by 
the  laws  of  this  state,  and  who  shall,  after  the  expiration 
of  the  term  of  the  trustees  first  elected,  be  actually 
elected,  by  the  stockholders,  at  such  time  and  place,  with- 
in this  state,  and  upon  such  notice  and  in  such  manner, 
as  shall  be  directed  by  the  by-laws  of  the  company;  but 
all  elections  shall  be  by  ballot,  and  each  stockholder, 
either  in  person  or  by  proxy,  shall  be  entitled  to  as  many 
votes  as  he  may  own,  or  represent  by  proxy,  shares  of 
stock,  and  the  person  or  persons  receiving  the  greatest 
number  of  votes  shall  be  trustee  or  trustees :  Provided, 
That  nothing  herein  contained  shall  prevent  any  corpora- 
tion, by  their  by-laws,  limiting  such  bona  fide  shareholder 
to  a  single  vote,  or  one  vote  for  every  full  share  of  paid- 
up  stock,  or  its  equivalent  in  assessable  stock,  disregard- 
ing the  number  of  shares  of  stock  he  may  own.  It  shall 
be  competent,  at  any  time,  for  two-thirds  of  the  stock- 
holders of  any  corporation  organized  under  this  chapter 


4  D 


50  LEGISLATIVE     PROVISIONS 

to  expel  any  trustee  from  office,  and  to  elect  another  to 
succeed  him.  In  all  cases  where  a  meeting  of  the  stock- 
holders is  called  for  the  purpose  of  expelling  a  trustee 
and  electing  his  successor,  such  notice  shall  be  given  of 
the  meeting  as  the  by-laws  of  the  company  may  require. 
Whenever  any  vacancy  shall  happen  among  the  trustees 
by  death,  resignation  or  otherwise,  except  by  removal 
and  the  election  of  his  successor  as  herein  provided,  it 
shall  be  filled  by  appointment  of  the  board  of  trustees. 
Every  such  corporation  shall  at  all  times  keep  at  its 
principal  place  of  business  in  this  state  an  officer  or 
officers,  agent  or  agents,  upon  whom  service  of  legal 
process  may  be  made,  in  conformity  with  the  law:  Pro- 
vided, That  service  of  such  process  may  be  made  at  any 
time  upon  any  resident  trustee  of  such  corporation. 

P.  C.  §  7059. 
B.  C.  §  4255. 

Burns  v.  Commencement  Bay  Land,  etc.,  Co.,  4  Wash.  558;   30  Pac. 
668,  709. 

Baggot  v.  Turner,  21  Wash.  339;   58  Pac.  212. 

Standard  Gold  Mining  Co.  v.  Byers,  31  Wash.  100;  71  Pac.  766. 

Spokane  v.  Amsterdamsch,  etc.,  22  Wash.  172;  60  Pac.  141. 

State  ex  rel.  Mitchell  v.  Horan,  22  Wash.  197;  60  Pac.  135. 

Budd  et  al.  v.  Walla  Walla  Printing  Co.,  2  Wash.  T.  347;  7  Pac.  896. 

Lapse  of  election  of  trustees. 

§  30.  If  it  shall  happen  at  any  time  that  an  election 
of  trustees  shall  not  be  made  on  the  day  designated  by 
the  by-laws  of  the  company  the  corporation  shall  not  for 
that  reason  be  dissolved;  but  it  shall  be  lawful  on  any 
other  day  to  hold  an  election  for  trustees,  in  such  manner 
as  shall  be  provided  for  in  the  by-laws  of  the  company, 
and  all  acts  of  the  trustees  shall  be  valid  and  binding 


LEGISLATIVE     PROVISIONS  51 

upon  the  company  until  their  successors  are  elected  and 
qualified. 

p.  c.  §  TOGO. 

B.  C.  §  4256. 
1  H.  C.  §  1503. 

Quorum. 

§  31.  A  majority  of  the  whole  number  of  trustees 
shall  form  a  board  for  the  transaction  of  business,  and 
every  decision  of  a  majority  of  the  persons  duly  assem- 
bled as  a  board  shall  be  valid  as  a  corporate  act. 

P.  C.  §  7061. 

B.  C.  §  4257. 

1  H.  C.  §  1504. 

Parsons  v.  Tacoma  Smelting,  etc.,  Co.,  25  Wash.  492;  65  Pac.  765. 

First  meeting. 

§  32.  The  first  meeting  of  the  trustees  shall  be  called 
by  a  notice  signed  by  one  or  more  persons  named  as 
trustees  in  the  certificate,  setting  forth  the  time  and  place 
of  the  meeting,  which  notice  shall  be  delivered  person- 
ally to  each  trustee,  or  published  at  least  twenty  days 
in  some  newspaper  in  the  county  in  which  the  principal 
place  of  business  of  the  corporation,  or  if  no  newspaper 
is  published  in  the  county,  then  in  some  newspaper  near- 
est thereto  in  the  state. 

P.  C.  §  7062. 

B.  C.  §  4258. 

1  H.  C.  §  1505. 

Budd  et  al.  v.  Walla  Walla  Printing  Co.,  2  Wash.  T.  347;  7  Pac.  896. 

Stock,  transferable. 

§  33.  The  stock  of  the  company  shall  be  deemed  per- 
sonal estate,  and  shall  be  transferable  in  such  manner  as 


52  LEGISLATIVE     PROVISIONS 

shall  be  prescribed  by  the  by-laws  of  the  company;  but 
no  transfer  shall  be  valid  except  between  the  parties 
thereto,  until  the  same  shall  have  been  entered  upon  the 
books  of  the  company,  so  as  to  show  the  names  of  the 
parties,  by  and  to  whom  transferred,  the  numbers  and 
designation  of  the  shares  and  the  date  of  the  transfer. 

P.  C.  §  7063. 
B.  C.  §  4261. 
1  H.  C.  §  1506. 

Port  Townsend  National  Bank  v.  Port  Townsend  Gas  &  Fuel  Co.,  6 
Wash.  597;  34  Pac.  155. 

Payment  of  subscriptions — Banks. 

§  34.  The  stockholders  of  any  corporation  formed 
under  this  act  may  in  the  by-laws  of  the  company  pre- 
scribe the  times,  manner  and  amounts  in  which  payments 
of  the  sums  subscribed  by  them  respectively  shall  be 
made ;  but  in  case  the  same  shall  not  be  so  prescribed,  the 
trustees  shall  have  the  power  to  demand  and  call  in  from 
the  stockholders  the  sums  by  them  subscribed,  at  such 
time  and  in  such  manner,  payments  or  installments,  as 
they  may  deem  proper.  In  all  cases  notice  of  each  assess- 
ment shall  be  given  to  the  stockholders  personally,  or  by 
publication  in  some  newspaper  published  in  the  county 
in  which  the  principal  place  of  business  of  the  company 
is  located;  and  if  none  be  published  in  such  county,  then 
in  the  newspaper  nearest  to  said  principal  place  of  busi- 
ness in  the  state.  If  after  such  notice  has  been  given 
any  stockholder  shall  make  default  in  the  payment  of 
assessments  upon  the  shares  held  by  him,  so  many  of 
said  shares  may  be  sold  as  will  be  necessary  for  the 
payment  of  the  assessment  upon  all  the  shares  held  by 
him,  her  or  them.  The  sale  of  said  shares  shall  be  made 
as  prescribed  in  the  by-laws  of  the  company,  but  shall  in 


LEGISLATIVE     PROVISIONS  53 

no  case  be  made  at  the  office  of  the  company.  No  sale 
shall  be  made  except  at  public  auction,  to  the  highest 
bidder,  after  a  notice  of  four  weeks,  published  as  above 
directed  in  this  section,  and  at  such  sale  the  person  who 
shall  pay  the  assessment  so  due,  together  with  the  ex- 
penses of  advertising  and  sale,  for  the  smallest  number 
of  shares  or  portion  of  a  share,  as  the  case  may  be,  shall 
be  deemed  the  highest  bidder:  Provided,  That  the 
amount  of  the  capital  stock  of  any  bank  incorporated 
under  this  act  shall  not  be  less  than  twenty-five  thousand 
dollars,  to  be  divided  into  shares  of  one  hundred  dollars 
each,  all  of  which  shares  shall  be  subscribed,  and  three- 
fifths  of  such  capital  stock  shall  be  paid  in  before  com- 
mencement of  business,  the  remainder  to  be  subject  to 
the  call  of  the  trustees,  and  it  shall  be  the  duty  of  the 
trustees  of  any  such  'bank  to  file  with  their  articles  of 
incorporation  their  affidavit  that  three-fifths  of  the  capi- 
tal stock  of  such  bank  has  been  actually  paid  in. 

P.  C.  §  7064. 

B.  C.  §  4262. 

1  H.  C.  §  1507. 

Cole  v.  Satsop  R.  R.  Co.,  9  Wash.  487;  37  Pac.  700;  43  Am.  St.  858. 

Elderkin  v.  Peterson,  8  Wash.  674;  36  Pac.  1089. 

Burch  v.  Taylor,  1  Wash.  245;  24  Pac.  438. 

Stewart  v.  Walla  Walla,  etc.,  Pub.  Co.,  1  Wash.  521;  20  Pac.  605. 

Z.  C.  Miles  Co.  v.  Robertson,  5  Wash.  352;  31  Pac.  970. 

Denny  Hotel  Co.  v.  Gilmore,  6  Wash.  152 ;  32  Pac.  1004. 

Dunlap  v.  Rauch,  24  Wash.  620;  64  Pac.  807. 

Troy  v.  Morse,  22  Wash.  280;  60  Pac.  648. 

Sligh  v.  Shelton  S.  W.  Ry.  Co.,  20  Wash.  16;  54  Pac.  763. 

Manhattan  Trust  Co.  v.  Seattle  Coal  &  Iron  Co.,  16  Wash.  499;  48  Pae. 

333,  737;  but  see  S.  C.  19  Wash.  493;  53  Pac.  951. 
Adamant  Mfg.  Co.  v.  Wallace,  16  Wash.  614;  48  Pac.  415. 
Turner  v.  Bailey,  12  Wash.  634;  42  Pac.  115. 
Kroenert  v.  Johnston,  19  Wash.  96 ;  52  Pac.  605. 
Dearborn  v.  Washington  Savings  Bank,  18  Wash.  8;  50  Pac.  575. 


54  LEGISLATIVE     PROVISIONS 

Fiduciaries  may  vote  stock. 

§  35.  Whenever  any  stock  is  held  by  a  person  as  ex- 
ecutor, administrator,  guardian  or  trustee,  he  shall  repre- 
sent such  stock  at  all  meetings  of  the  company  and  may 
vote  accordingly  as  a  stockholder. 

P.  C.  §  7065. 
B.  C.  §  4263. 
1  H.  C.  1508. 

Stock  may  be  voted  though  pledged. 

§  36.  Any  stockholder  may  pledge  his  stock  by  a  de- 
livery of  the  certificate  or  other  evidence  of  his  interest, 
but  may,  nevertheless,  represent  the  same  at  all  meetings 
and  vote  as  a  stockholder. 

P.  C.  §  7066. 

B.  C.  §  4264. 

1  H.  €.  §  1509. 

Brown  v.  Union  Savings,  etc.,  Ass'n,  28  Wash.  657 ;  69  Pac.  383. 

Port  Townsend  National  Bank  v.  Port  Townsend  Gas  &  Fuel  Co., 

6  Wash.  597;   34  Pac.  155. 

Dearborn  v.  Washington  Savings  Bank,  18  Wash.  8;  50  Pac.  575. 
Spokane  v.  Amsterdamsch,  etc.,  22  Wash.  172;  60  Pac.  141. 

Dividends  only  from  profits — Reduction  of  stock. 

§  37.  It  shall  not  be  lawful  for  the  trustees  to  make 
any  dividend  except  from  the  net  profits  arising  from  the 
business  of  the  corporation,  nor  divide,  withdraw,  or  in 
any  way  pay  to  the  stockholders,  or  any  of  them,  any 
part  of  the  capital  stock  of  the  company,  nor  to  reduce 
the  capital  stock  of  the  company  unless  in  the  manner 
prescribed  in  this  act,  or  the  articles  of  incorporation 
or  by-laws ;  and  in  case  of  any  violation  of  the  provisions 
of  this  section,  the  trustees,  under  whose  administration 


LEGISLATIVE  PROVISIONS.  55 

the  same  may  have  happened,  except  those  who  may  have 
caused  their  dissent  therefrom  to  be  entered  at  large  on 
the  minutes  of  the  board  of  trustees  at  the  time,  or  were 
not  present  when  the  same  did  happen,  shall,  in  their 
individual  or  private  capacities,  be  jointly  or  severally 
liable  to  the  corporation  and  the  creditors  thereof  in  the 
event  of  its  dissolution,  to  the  full  amount  so  divided,  or 
reduced,  or  paid  out;  provided,  that  this  section  shall 
not  be  construed  to  prevent  a  division  and  distribution 
of  the  capital  stock  of  the  company  which  shall  remain 
after  the  payment  of  all  its  debts  upon  the  dissolution 
of  the  corporation  or  the  expiration  of  its  charter. 

P.  C.  §  7067. 

B.  C.  §  4265. 

1  H.  C.  §  1510. 

Tait  v.  Pigott,  32  Wash.,  345;  73  Pac.  364. 

Shuey  v.  Adair,  24  Wash.  378;  64  Pac.  388. 


Power  to  issue  negotiable  paper. 

§  38.  No  corporation  organized  under  this  act  shall, 
by  any  implication  or  construction,  be  deemed  to  pos- 
sess the  power  of  issuing  bills,  notes  or  other  evidence  of 
debt  for  circulation  as  money,  except  bonds  by  railroad 
companies,  which  shall  at  no  time  exceed  double  the 
amount  of  paid  up  stock  issued  by  said  company.  Each 
and  every  stockholder  shall  be  personally  liable  to  the 
creditors  of  the  company  to  the  amount  of  what  remains 
unpaid  upon  his  subscription  to  the  capital  stock  and 
not  otherwise :  Provided,  that  the  stockholders  of  every 
bank  incorporated  under  this  act  shall  be  held  individ- 
ually responsible,  equally  and  ratably,  and  not  one  for 
another,  for  all  contracts,  debts  and  engagements  of  such 
association  accruing  while  they  remain  such  stockholders, 


56  LEGISLATIVE  PROVISIONS. 

to  the  extent  of  the  amount  of  their  stock  therein  at  the 
par  value  thereof  in  addition  to  the  amount  invested  in 
such  shares,  and  all  such  banking  corporations  shall  file, 
on  the  first  Monday  in  June,  each  year,  with  the  state 
auditor,  a  report  sworn  to  by  its  president,  vice  president 
or  cashier  of  the  resources  and  liabilities,  stating  the 
amount  of  deposits,  the  aggregate  loans  and  amount  upon 
each  class  of  securities,  the  names  and  residences  of  the 
shareholders  and  number  of  their  shares,  the  trustees 
or  officers  for  the  time  being,  and  any  other  matters  af- 
fecting the  safety  of  their  deposits  or  the  interest  of 
their  creditors ;  and  such  banking  corporations  shall  have 
power  to  exercise,  by  its  board  of  trustees  or  duly  author- 
ized officers  or  agents,  all  such  incidental  powers  as 
shall  be  necessary  to  carry  on  the  business  of  banking, 
by  discounting  and  negotiating  promissory  notes,  drafts, 
bills  of  exchange  and  other  evidences  of  debt;  by  receiv- 
ing deposits,  buying  and  selling  exchange,  coin  and  bul- 
lion, by  loaning  money  on  real  estate  or  personal  security, 
to  accept  and  execute  all  trusts,  fiduciary  or  other- 
wise as  may  be  committed  to  such  bank  or  corporation 
by  any  person,  persons  or  corporation,  or  by  the  order 
or  direction  of  any  court,  and  may  do  any  other  business 
pertaining  to  banking.  Any  person  or  persons  who  shall 
be  engaged  in  the  business  of  banking  who  shall  put  up 
or  cause  to  be  put  up  or  exhibit  any  sign  or  advertise- 
ment, purporting  thereby  to  be  an  incorporated  bank 
or  shall  do  business  under  a  corporate  name  when  they 
are  not  such,  shall,  on  conviction  thereof,  be  adjudged 
guilty  of  a  misdemeanor  and  punished  by  a  fine  not  ex- 
ceeding two  hundred  dollars:  Provided  further,  that 
the  provisions  of  this  section  shall  not  apply  to  the  de- 
bentures or  bonds  of  any  company  duly  incorporated 
under  the  provisions  of  this  act,  the  payment  of  which 


LEGISLATIVE  PROVISIONS.  57 

debentures  or  bonds  shall  be  secured  by  an  actual  trans- 
fer of  real  estate  securities  for  the  benefit  and  protec- 
tion of  purchasers  of  said  debentures  or  bonds,  such  se- 
curities to  be  at  least  equal  in  amount  to  the  par  value 
•of  such  bonds  or  debentures,  and  to  be  first  liens  upon 
unincumbered  real  estate,  worth  at  least  twice  the  amount 
loaned  thereon;  provided  further,  however,  that  such 
issue  of  debentures  or  bonds  shall  in  no  cases  exceed  ten 
times  the  capital  stock  of  the  issuing  corporation. 

P.  C.  §  7068. 

B.  C.  §  4266. 

1  H.  C.  §  1511. 

Kiggins  v.  Munday,  19  Wash.  233;  52  Pac.  855. 

Shuey  v.  Holmes,  22  Wash.  193;  60  Pac.  402. 

Holder  of  stock  as  collateral  not  liable. 

§  39.  No  person  holding  stock  as  executor,  adminis- 
trator, guardian  or  trustee,  or  holding  it  as  collateral 
security,  or  in  pledge,  shall  be  personally  subject  to  any 
liability  as  a  stockholder  of  the  company ;  but  the  person 
pledging  the  stock  shall  be  considered  as  holding  the 
same,  and  shall  be  liable  as  a  stockholder,  and  the  estate 
and  funds  in  the  hands  of  the  executor,  administrator  or 
guardian  or  trustee  shall  be  liable  in  like  manner  and  to 
the  same  extent  as  the  testator,  or  intestate,  or  the  ward 
or  person  interested  in  the  trust  fund  would  have  been  if 
he  or  she  had  been  living  and  competent  to  act  and  hold 
the  stock  in  his  or  her  name. 

P.  C.  §  7069. 
B.  C.  §  4268. 
1  H.  C.  §  1512. 


58  LEGISLATIVE  PROVISIONS. 

Record  of  stockholders — Inspection. 

§  40.  It  shall  be  the  duty  of  the  trustees  of  every 
company  incorporated  under  this  act,  to  keep  a  book 
containing  the  names  of  all  persons,  alphabetically  ar- 
ranged, who.  are  or  shall  be  stockholders  of  the  corpora- 
tion and  showing  the  number  of  shares  of  stock  held  by 
them  respectively,  and  the  time  when  they  became  the 
owners  of  such  shares,  which  book,  during  the  usual  bus- 
iness hours  of  the  day,  on  every  day  excepting  Sundays 
and  the  legal  holidays,  shall  be  open  for  the  inspection  of 
stockholders  and  creditors  of  the  company  at  the  office 
or  principal  place  of  business  of  the  company;  and  any 
stockholder  or  creditor  of  the  company  shall  have  the 
right  to  make  extracts  from  such  book,  or  to  demand  and 
receive  from  the  clerk  or  other  officer  having  the  charge  of 
such  book,  a  certified  copy  of  any  entry  therein,  or  to 
demand  and  receive  from  any  clerk  or  officer  a  certified 
copy  of  any  paper  placed  on  file  in  the  office  of  the  com- 
pany, and  such  book  and  certified  copy  shall  be  presump- 
tive evidence  of  the  fact  therein  stated  in  any  action  or 
proceeding  against  the  company  or  any  one  or  more  of 
the  stockholders. 

P.  C.  §  7070. 
B.  C.  §  4269. 
1  H.  C.  §  1513. 

False  entries. 

§  41.  If  at  any  time  the  clerk  or  other  officer  having 
charge  of  such  book  shall  make  any  false  entry  or  neg- 
lect to  make  any  proper  entry  therein,  or  having  the 
charge  of  any  papers  of  the  company  shall  refuse  or 
neglect  to  exhibit  the  same  or  allow  the  same  to  be  in- 
spected, or  extracts  to  be  taken  therefrom,  or  to  give  a 


LEGISLATIVE  PROVISIONS.  59 

certified  copy  of  any  entry  as  provided  in  the  preceding 
section,  he  shall  be  deemed  guilty  of  a  misdemeanor, 
and  shall  forfeit  and  pay  to  the  injured  party  a  penalty 
of  not  less  than  one  hundred  nor  more  than  one  thousand 
dollars  and  all  damages  resulting  therefrom,  to  be  recov- 
ered in  any  action  of  debt  in  any  court  having  competent 
jurisdiction;  and  for  neglecting  to  keep  such  book  for 
inspection  as  aforesaid,  the  corporation  shall  forfeit  to 
the  people  the  sum  of  one  hundred  dollars  for  every  day 
it  shall  so  neglect,  to  be  sued  for  and  recovered  in  the 
name  of  the  people  in  the  superior  court  of  the  county 
in  which  the  principal  place  of  business  of  the  corporation 
is  located. 

P.  C.  §  7071. 
B.  C.  §  4270. 
1  H.  C.  §  1514. 

Increase  or  decrease  of  capital  stock. 

§  42.  Any  company  incorporated  under  this  act,  may, 
by  complying  with  the  provisions  herein  contained,  in- 
crease or  diminish  its  capital  stock  to  any  amount  which 
may  be  deemed  sufficient  and  proper  for  the  purposes 
of  the  corporation;  but  before  any  corporation  shall  be 
entitled  to  diminish  the  amount  of  its  capital  stock,  if 
the  amount  of  its  debts  and  liabilities  shall  exceed  the 
sum  to  which  the  capital  is  proposed  to  be  diminished 
such  amount  shall  be  satisfied  and  reduced  so  as  not  to 
exceed  the  diminished  amount  of  the  capital;  provided, 
that  the  deposits  in  any  trust  company  or  banking  cor- 
poration shall  not  be  included  in  ascertaining  the  debts 
and  liabilities  of  such  trust  company  or  banking  corpora- 
tion' for  the  purposes  of  this  section :  Provided  further, 
that  this  act  shall  not  relieve  such  trust  company  or 
banking  corporation  or  the  stockholders  of  any  such 


gO  LEGISLATIVE  PROVISIONS. 

trust  company  or  banking  corporation  from  liability,  al- 
though contingent,  or  remote,  incurred  or  entered  into 
by  such  trust  company  or  banking  corporation  prior  to 
the  reduction  of  its  capital,  including  liability  for  depos- 
its: Provided  further,  that  before  any  banking  cor- 
poration, or  trust  company,  can  reduce  its  capitalization, 
a  notice,  in  writing,  must  be  mailed  to  the  last  known 
postoffice  address  of  its  depositors,  setting  forth  the  fact 
that  the  said  banking  corporation,  or  trust  company,  in- 
tends to  decrease  its  capitalization,  showing  the  amount 
of  its  capitalization  and  the  amount  to  which  it  intends 
to  decrease  the  same;  and  proof  of  the  mailing  of  such 
notices  shall  be  made  by  affidavit  of  the  party  mailing 
the  same,  showing  the  names  and  addresses  of  the  per- 
sons to  whom  mailed. 

Laws  '99,  p.  174. 
P.  C.  §  7072. 


Stockholders'  meeting — Vote. 

§  43.  Whenever  it  is  desired  to  increase  or  diminish 
the  amount  of  capital  stock,  a  meeting  of  the  stockhold- 
ers shall  be  called  by  a  notice  signed  by  at  least  a  major- 
ity of  the  trustees,  and  published  at  least  eight  weeks  in 
some  newspaper  published  in  the  county  where  the  prin- 
cipal place  of  business  of  the  company  is  located;  or  if 
no  newspaper  is  published  in  the  county,  then  the  news- 
paper nearest  thereto  in  the  state,  which  notice  shall  spe- 
cify the  object  of  the  meeting,  the  time  and  place  where 
it  is  to  be  held,  and  the  amount  to  which  it  is  proposed  to 
increase  or  diminish  the  capital,  and  a  vote  of  two-thirds 
of  all  the  shares  of  the  stock  shall  be  necessary  to  increase 
or  diminish  the  amount  of  capital  stock. 


LEGISLATIVE  PROVISIONS. 


P.  C.  §  7073. 
B.  C.  §  4272. 
1  H.  C.  §  1516. 


Statement  to  be  filed. 

§  44.  If  at  a  meeting  so  called  a  sufficient  number  of 
votes  have  been  given  in  favor  of  increasing  or  dimin- 
ishing the  amount  of  capital,  a  certificate  of  the  proceed- 
ings showing  a  compliance  with  these  provisions,  the 
amount  of  capital  actually  paid  in,  the  whole  amount  of 
debts  and  liabilities  of  the  company,  and  the  amount  to 
which  the  capital  stock  is  to  be  increased  or  diminished, 
shall  be  made  out  and  signed  and  verified  by  the  affidavit 
of  the  chairman  and  secretary  of  the  meeting,  certified 
to  by  a  majority  of  'the  trustees,  and  filed  as  required 
by  section  2422  (Sec.  24),  and  when  so  filed  the  capital 
stock  of  the  corporation  shall  be  increased  or  diminished 
to  the  amount  specified  in  the  certificate. 

P.  C.  §  7074. 
B.  C.  §  4273. 
1  H.  C.  §  1517. 

On  dissolution — Funds  held  in  trust  for  creditors. 

§  45.  Upon  the  dissolution  of  any  corporation  formed 
under  the  provisions  of  this  act  the  trustees  at  the  time 
of  the  dissolution  shall  be  trustees  of  the  creditors  and 
stockholders  of  the  corporation  dissolved,  and  shall  have 
full  power  and  authority  to  sue  for  and  recover  the 
debts  and  property  of  the  corporation  by  the  name  of  the 
trustees  of  such  corporation,  collect  and  pay  the  outstand- 
ing debts,  settle  all  its  affairs  and  divide  among  the 


62  LEGISLATIVE  PROVISIONS. 

stockholders  the  money  and  other  property  that  shall  re- 
main after  the  payment  of  the  debts  and  necessary  ex- 
penses. 

P.  C.  §  7075. 

B.  C.  §  4274. 

1  H.  C.  §  1518. 

Strohl  v.  Seattle  Nat'l  Bank,  25  Wash.  28;  64  Pac.  916. 

Potvin  v.  Denny  Hotel  Co.,  26  Wash.  309;  66  Pac.  376. 

Morrison  v.  Blue  Star  Nav.  Co.,  26  Wash.  541;  67  Pac.  244. 

Deering  v.  Holcomb,  26  Wash.  588;  67  Pac.  240,  561. 

Washington  Liquor  Co.  v.  Alladio  Cafe  Co.,  28  Wash.  176;  68  Pac.  444. 

Thompson  v.  Huron  Lumber  Co.,  4  Wash.  600;  30  Pac.  741;  31  Pac.  25. 

Leslie  v.  Wilshire,  6  Wash.  282;  33  Pac.  505. 

Vincent  v.  Snoqualmie  Mill  Co.,  7  Wash.  566;  35  Pac.  396. 

Mayer  v.  Woolery,  10  Wash.  354 ;  39  Pac.  135. 

Conover  v.  Hull,  10  Wash.  673;  39  Pac.  166;  45  Am.  St.  810. 

Brooks  v.  Skookum  Mfg.  Co.,  9  Wash.  80;  37  Pac.  284. 

Burrell  v.  Bennett,  20  Wash.  644 ;  56  Pac.  375. 

Van  Brocklin  v.  Queen  City  Printing  Co.,  19  Wash.  552;  53  Pac.  822. 

Carroll  v.  Pacific  Nat'l  Bank,  19  Wash.  639;  54  Pac.  32. 

Cook  v.  Moody,  18  Wash.  114;  50  Pac.  1020;  63  Am.  St.  872. 

Griffith  v.  Burlingame,  18  Wash.  429;  51  Pac.  1059. 

Biddle  Pur.  Co.  v.  Port  Townsend  Steel,  etc.,  Co.,  16  Wash.  681;   48 

Pac.  407. 

Compton  v.  Schwabacher  Bros.  &  Co.,  15  Wash.  306;  46  Pac.  338. 
Watterson  v.  Masterson,  15  Wash.  511;  46  Pac.  1041. 
Barto  v.  Nix,  15  Wash.  563;  46  Pac.  1033. 
Wilson  v.  Book,  13  Wash.  676;  43  Pac.  939. 

New  York  N.  E.  Bank  v.  Metropolitan  Bank,  28  Wash.  553;  68  Pac.  905. 
Burch  v.  Taylor,  1  Wash.  245;  24  Pac.  438. 
Bramel  v.  Manring,  18  Wash.  421;  51  Pac.  1050. 
McRae  v.  Bowers  Dredging  Co.,  86  Fed.  Rep.  344. 

Dissolution. 

§  46.  Any  corporation  formed  under  this  act  may 
dissolve  and  disincorporate  itself  by  presenting  to  the 
superior  judge  of  the  county  in  which  the  office  of  the 
company  is  located,  a  petition  to  that  effect,  accompanied 


LEGISLATIVE  PROVISIONS.  63 

by  a  certificate  of  its  proper  officers  and  setting  forth 
that  at  a  meeting  of  the  stockholders  called  for  that  pur- 
pose, it  was  decided  by  a  vote  of  two-thirds  of  all  the 
stockholders  to  disincorporate  and  dissolve  the  corpora- 
tion. Notice  of  the  application  shall  then  be  given  by 
the  clerk,  which  notice  shall  set  forth  the  nature  of  the 
application,  and  shall  specify  the  time  and  place  at  which 
it  is  to  be  heard,  and  shall  be  published  in  some  news- 
paper of  the  county  once  a  week  for  eight  weeks,  or  if 
no  newspaper  is  published  in  the  county,  by  publication 
in  the  newspaper  nearest  thereto  in  the  state.  At  the 
time  and  place  appointed,  or  at  any  other  time  to  which 
it  may  be  postponed  by  the  judge,  he  shall  proceed  to 
consider  the  application,  and  if  satisfied  that  the  corpora- 
tion has  taken  necessary  preliminary  steps  and  obtained 
the  necessary  vote  to  Dissolve  itself,  and  that  all  claims 
against  the  corporation  are  discharged,  he  shall  enter 
an  order  declaring  it  dissolved. 

P.  C.  §  7076. 
B.  C.  §  4275. 
1  H.  C.  §  1519. 

Removal  of  office. 

§  47.  Any  corporation  desiring  at  any  time  to  remove 
its  principal  place  of  business  into  some  other  county  in 
the  state,  shall  file  in  the  office  of  the  county  auditor  a 
certified  copy  of  its  certificate  of  incorporation.  If  it  is 
desired  to  remove  its  principal  place  of  business  to  some 
other  city,  town,  or  locality  within  the  same  county,  pub- 
lication shall  be  made  of  such  removal  at  least  once  a 
week  for  four  weeks  in  the  newspaper  published  nearest 
to  the  city,  town  or  locality  from  which  the  principal 
place  of  business  of  such  corporation  is  desired  to  be 


54  LEGISLATIVE  PROVISIONS. 

removed.  The  formation  or  corporate  acts  of  any  cor- 
poration hereafter  formed  under  this  act  shall  not  be 
rendered  invalid  by  reason  of  the  fact  that  its  principal 
place  of  business  may  not  have  been  designated  in  its 
certificate  of  incorporation :  Provided,  that  within  three 
months  from  the  passage  of  this  act  such  corporation 
shall  cause  publication  to  be  made  once  a  week  for  at 
least  four  weeks  in  the  newspaper  published  nearest  the 
city,  town,  or  locality,  and  where  the  principal  place  of 
business  of  such  corporation  has  been  in  fact  located, 
designating  the  city,  town  or  locality  and  county  where 
its  principal  place  of  business  shall  be  located.  On  com- 
pliance with  the  provisions  of  this  section  in  the  several 
cases  herein  mentioned,  the  principal  place  of  business 
of  any  corporation  shall  be  deemed  established,  or  re- 
moved at  or  to  any  designated  city,  town  or  locality,  in 
the  state. 

P.  C.  §  7077. 
B.  C.  §  4276. 
1  H.  C.  §  1520. 

Corporations  validated. 

§  48.  All  persons  who  have  organized  themselves  as 
a  corporation  under  the  provisions  of  this  act  for  pur- 
poses other  than  those  enumerated  in  section  2421  (Sec. 
23),  are  hereby  declared  incorporate  bodies,  with  all  the 
powers  the  same  as  they  would  enjoy  had  they  been  incor- 
porated for  the  purposes  set  forth  in  said  section  2421 
(Sec.  23). 

P.  C.  §  7078. 

Mining  corporation — Subscription  of  stock. 

§  49.  In  incorporations  already  formed,  or  which  may 
hereafter  be  formed  under  this  act,  where  the  amount 


LEGISLATIVE  PROVISIONS.  65 

of  the  capital  stock  of  such  corporation  consists  of  the 
aggregate  valuation  of  the  whole  number  of  feet,  shares, 
or  interest  in  any  mining  claim  in  this  state,  for  the 
working  and  development  of  which  such  corporation 
shall  be  or  have  been  formed,  no  actual  subscription  to 
the  capital  stock  of  such  corporation  shall  be  necessary; 
but  each  owner  in  said  mining  claim  shall  be  deemed  to 
have  subscribed  such  an  amount  to  the  capital  stock  of 
such  corporation  as  under  its  by-laws  will  represent  the 
value  of  so  much  of  his  interest  in  said  mining  claim, 
the  legal  title  to  which  he  may  by  deed,  deed  of  trust  or 
other  instrument  vest,  or  have  vested  in  such  corporation 
for  mining  purposes;  such  subscription  to  be  deemed  to 
have  been  made  on  the  execution  and  delivery  to  such 
corporation  of  such  deed,  deed  of  trust,  or  other  instru- 
ment; nor  shall  the  validity  of  any  assessment  levied  by 
the  board  of  trustees  of  such  corporation  be  affected  by 
reason  of  the  fact  that  the  full  amount  of  the  capital 
stock  of  such  corporation,  as  mentioned  in  its  certificate 
of  incorporation,  shall  not  have  been  subscribed  as  pro- 
vided in  this  section :  Provided,  that  the  greater  portion 
of  said  amount  of  capital  stock  shall  have  been  so  sub- 
scribed: And,  provided  further,  that  this  section  shall 
not  be  so  construed  as  to  prohibit  the  stockholders  of 
any  corporation  formed,  or  which  may  be  formed,  for 
mining  purposes  as  provided  in  this  section,  from  regu- 
lating the  mode  of  making  subscriptions  to  its  capital 
stock  and  calling  in  the  same  by  by-laws  or  express  con- 
tract. 

P.  C'.  §  7079. 
B.  C.  §  4280. 
1  H.  C.  §  1558. 
5  D 


66  LEGISLATIVE  PROVISIONS. 

Act  applies  to  water  companies. 

§  50.  The  provisions  of  this  act  shall  extend  to  and 
apply  to  all  associations  already  formed  under  any  law 
of  this  state,  or  hereafter  to  be  formed  under  the  provi- 
sions of  this  act,  for  the  purpose  of  supplying  any  cities 
or  towns  in  this  state,  or  the  inhabitants  thereof  with 
pure  and  fresh  water. 

p.  c.  §  7080. 

B.  C.  §  4277. 
1  H.  C.  §  1521. 

Water  company  may  condemn. 

§  51.  Such  water  companies  incorporated  for  the  pur- 
poses specified  in  the  preceding  section  shall  have  the 
right  to  purchase  or  take  possession  of  and  use  and  hold 
such  lands  and  waters  for  the  purposes  of  the  company, 
lying  without  the  limits  of  the  city  or  town  intended  to 
be  supplied  with  water  upon  making  compensation  there- 
for. The  mode  of  proceeding  to  obtain  possession  of 
such  lands  for  the  use  of  the  company,  right  of  way  for 
laying  pipes  and  aqueducts  for  the  use  of  the  company, 
when  the  parties  cannot  agree  shall  so  far  as  the  same 
be  applicable  be  as  prescribed  in  act  at  section  5102: 
(See  explanatory  note,  p.  94.)  Provided,  that  nothing 
herein  contained  shall  be  so  construed  as  to  authorize  the 
appropriation  of  water  belonging  to  any  person,  unless 
the  owner  thereof  shall  refuse  to  supply  said  town  or  city 
with  water  after  being  requested  so  to  do  by  the  town 
board  or  city  council. 

P.  C.  §  7081. 
B.  C.  §  4278. 
1  H.  C.  §  1522. 


LEGISLATIVE  PROVISIONS.  67 

Consent  of  town. 

§  52.  Water  companies  hereafter  incorporated  under 
the  provisions  of  this  act  must  first  obtain  from  the  cor- 
porate authorities  of  a  city  or  town  intended  to  be  sup- 
plied with  water,  the  right  or  privilege  so  to  do;  but 
nothing  herein  contained  shall  affect  parties  now  acting 
under  legislative  grants  or  franchises. 

P.  C.  §  7082. 
B.  C.  §  4279. 
1  H.  C.  §  1523. 

Powers  of  foreign  corporations. 

§  53.  Any  corporation  incorporated  under  the  laws 
of  any  state  or  territory  in  the  United  States,  or  of  any 
foreign  country,  state  or  colony,  for  any  of  the  purposes 
for  which  domestic  corporations  are  authorized  to  be 
formed  under  the  laws  of  this  state,  shall  have  full  power 
and  is  hereby  authorized,  to  sue  and  to  be  sued  in  any 
court  having  competent  jurisdiction;  to  acquire,  pur- 
chase, hold,  mortgage,  sell,  convey,  or  otherwise  dispose 
of,  in  the  corporate  name  all  real  estate  or  personal  prop- 
erty necessary  or  convenient  to  carry  into  effect  the  ob- 
jects and  purposes  of  its  incorporation,  and  also  any  in- 
terest in  real  estate  by  mortgage  or  otherwise  do  [due] 
to  or  loans  made  by  such  foreign  corporations  within  the 
boundaries  of  this  state,  either  prior  to  or  after  the 
passage  of  this  act,  and  generally  do  and  perform  every 
act  and  transact  every  kind  of  business  within  this  state 
in  the  same  manner  and  to  the  same  extent  as  corpora- 
tions incorporated  and  organized  under  the  laws  of  this 
state  are  authorized  to  do  under  the  laws  of  this  state, 
by  a  compliance  with  all  the  conditions  prescribed  by  the 


68  LEGISLATIVE  PROVISIONS. 

second  and  third  sections  of  this  act  (sees,  54,  55) :  Pro- 
vided, however,  that  this  act,  shall  not  be  so  construed  as 
to  allow  such  foreign  corporation  to  transact  business 
within  the  state  on  more  favorable  conditions  than  are 
prescribed  by  law  for  similiar  corporations  organized 
under  the  laws  of  this  state :  And  provided  further,  that 
no  corporation,  the  majority  of  the  capital  stock  of  which 
is  owned  by  aliens  other  than  those  who  in  good  faith  have 
declared  their  intentions  to  become  citizens  of  the  United 
States,  shall  acquire  the  ownership  of  any  lands  in  this 
state,  other  than  lands  containing  valuable  deposits  of 
minerals,  metals,  iron,  coal  or  fire  clay,  and  the  necessary 
land  for  mills  and  machinery  to  be  used  in  the  develop- 
ment thereof,  and  the  manufacture  of  products  therefrom, 
except  where  acquired  under  mortgage  or  in  good  faith  in 
the  ordinary  course  of  justice  in  the  collection  of  debts; 
provided  further,  that  no  foreign  corporation  which  is 
hereafter  organized,  which  has  among  its  other  powers 
the  business  of  dealing  in  real  estate,  and  buying  and  sell- 
ing the  same,  and  for  the  purpose  of  carrying  on  a  real 
estate  brokerage  business  shall  be  permitted  to  transact 
such  business  of  buying  and  selling,  and  dealing  in  real 
estate  and  carrying  on  a  brokerage  business  therein  in 
this  state;  but  this  prohibition  shall  not  extend  to  any 
other  business  for  the  transaction  of  which  such  corpora- 
tion may  be  organized. 

P.  C.  §  7214;  Laws  '90,  p.  288. 
B.  C.  §  4291. 
1H.  C.  §  1522. 

Realty  Co.  v.  Appolonio,  5  Wash.  437;  32  Pac.  219. 
Oregon  Mortgage  Co.  v.  Carstens,  16  Wash.  165;  47  Pac.  421;  35  L.  R. 
A.  841. 


LEGISLATIVE  PROVISIONS.  59 

Daniel  v.  Gold  Hill  Mining  Co.,  28  Wash.  411;  68  Pac.  884. 
La  France,  etc.,  Co.  v.  Mount  Vernon,  9  Wash.  142;   37  Pac.  287;   38 
Pac.  80;  43  Am  St.  827. 
Dearborn  Foundry  Co.  v.  Augustine,  5  Wash.  67;  31  Pac.  327. 

Must  file  and  record  papers. 

§  54.  Such  corporations  shall  cause  to  be  filed  and 
recorded  in  the  office  of  the  secretary  of  state,  a  certified 
copy  of  its  charter,  articles  of  incorporation,  memoran- 
dum of  association,  or  certificate  of  incorporation  certi- 
fied to  by  the  officer  who  is  the  custodian  of  the  same, 
according  to  the  laws  of  the  state  or  territory,  country  or 
colony,  where  such  corporation  is  incorporated,  or  who 
is  authorized  to  issue  certificates  of  incorporation,  ac- 
cording to  the  laws  of  such  state,  territory,  or  foreign 
country  or  colony.  The  instruments  herein  required  to 
be  filed  and  recorded -shall  be  attested  by  such  certifying 
officer,  under  his  hand  and  seal  of  office,  which  attesta- 
tion shall  be  prima  facie  proof  of  the  facts  therein  stated, 
and  of  the  genuineness  of  the  certificate.  If  such  officer 
has  no  official  seal,  his  certificate  shall  state  that  fact 
over  his  signature,  and  thereupon  the  secretary  of  state, 
or  of  the  territory,  in  case  of  corporations  within  the 
'United  States,  and  the  consul-general,  consul,  vice  consul, 
deputy-consul,  consular  agent,  or  commercial  agent  of  the 
United  States,  at  or  nearest  to  the  place  where  such  cer- 
tificate is  made,  in  the  case  of  corporations  not  within  the 
United  States,  shall  certify,  under  his  hand  and  seal  of 
office,  to  the  genuineness  of  the  signature  of  the  officer 
making  the  certificate,  and  to  the  fact  that  at  the  time  of 
making  such  certificate  the  person  making  the  same  held 
the  office  described  in  the  certificate. 

p.  C.  §  7215. 

B.  C.  §  4292. 

(56) 


70  LEGISLATIVE  PROVISIONS. 

1  H.  C.  §  1525. 

Knapp,  Burrell  &  Co.  v.  Strand,  4  Wash.  686;  30  Pac.  1063. 
Huttig  Bros.  Mfg.  Co.  v.  Denny  Hotel  Co.,  6  Wash.  122;  32  Pac.  1073. 
Edison,  etc.,  Co.  v.  Canadian  Pac.  Nav.  Co.,  8  Wash.  370;  36  Pac.  260; 
40  Am.  St.  910;  24  L.  R.  A.  315. 
Whitman  Agl.  Co.  v.  Strand,  8  Wash.  647;  36  Pac.  682. 


Must  appoint  a  resident  agent. 

§  55.  Such  corporations  shall  also  constitute  and  ap- 
point an  agent  who  shall  reside  at  the  place  in  the  state 
where  the  principal  business  of  the  corporation  is  to  be 
carried  on,  to  be  designated  as  hereinafter  required. 
Such  appointment  shall  be  in  writing,  signed  by  the  pres- 
ident or  chief  officer  of  such  corporation,  and  shall  be  at- 
tested by  its  corporate  seal,  and  shall  contain  the  name 
of  the  agent,  his  place  of  residence  and  the  place  where 
the  principal  business  of  such  is  to  be  carried  on,  and 
shall  authorize  such  agent  to  accept  service  of  process 
in  any  action  or  suit  pertaining  to  the  property,  business 
or  transactions  of  such  corporation  within  this  state  in 
which  such  corporation  may  be  a  party.  The  signature 
of  such  president  or  chief  officer,  attested  by  the  corpo- 
rate seal  to  such  written  appointment,  shall  be  sufficient 
proof  of  the  appointment  of  such  agent.  Such  appoint- 
ment, when  duly  executed,  shall  be  filed  for  record  in  the 
office  of  the  secretary  of  state  by  such  corporation,  and 
shall  be  there  recorded;  and  such  corporation  shall  have 
and  keep  continually  some  resident  agent,  empowered  as 
aforesaid  during  all  the  time  such  corporation  shall  con- 
duct or  carry  on  any  business  within  this  state,  and  serv- 
ice of  any  process,  pleading,  notice  or  other  paper  shall 
be  taken  and  held  as  due  service  on  such  corporations. 
Such  corporation  may  change  its  agents  or  its  principal 


LEGISLATIVE  PROVISIONS.  71 

place  of  business,  from  time  to  time,  by  filing  and  record- 
ing with  the  secretary  of  state  a  new  appointment,  stat- 
ing the  change  of  such  agent  or  the  change  in  the  prin- 
cipal place  of  business. 

P.  C.  §  7216. 
B.  C.  §  4293. 
1  H.  C.  §  1526. 


Penalty. 

§  56.  Any  foreign  corporation  doing  business  in  this 
state  which  shall  fail  to  comply  with  the  provisions  of 
sections  1525  (Sec.  54)  and  1526  (Sec.  55)  of  1  Hill's  An- 
notated Statutes  and  Codes  of  Washington,  shall  be  sub- 
ject to  a  penalty  of  two  hundred  and  fifty  dollars,  to  be 
recovered  in  a  civil  action  to  be  instituted  by  the  attorney 
general  in  the  name  of  the  State  of  Washington,  upon  his 
being  furnished  with  a  sworn  statement  of  facts  sufficient 
to  justify  such  action. 

Acts  '99,  p.  100. 
P.  C.  §  7217. 

All  penalties  so  recovered  shall  be  paid  into  the  gen- 
eral fund  of  the  state  treasury. 

Acts  '99,  p.  100. 
P.  C.  §  7217a. 

Act  does  not  apply  to  companies  now  doing  business. 

§  57.  No  corporation  which  has  heretofore  complied 
with  the  laws  of  the  State  or  Territory  of  Washington 
hitherto  existing  regarding  foreign  corporations,  and  has 
kept  a  duly  appointed  agent  within  the  boundaries  of  the 
state  as  heretofore  required,  shall  be  required  to  file  for 


72  LEGISLATIVE  PROVISIONS. 

record  or  cause  to  be  recorded  the  certified  copies  re- 
quired by  this  act,  or  to  execute  or  file  for  record  or  cause 
to  be  recorded  a  new  appointment  of  agent  as  herein  re- 
quired. 

P.  C.  §  7218. 
B.  C.  §  4294. 
1  H.  C.  §  1527. 

County  assessor  shall  report. 

§  58.  It  shall  be  the  duty  of  each  and  every  county 
assessor  in  this  state  to  ascertain  each  and  every  year,  at 
the  time  of  the  tax  assessment  of  his  county,  the  name  of 
every  foreign  corporation  doing  business  by  agent  or 
otherwise  within  his  county,  the  nature  of  such  business 
and  the  name  of  the  agent  of  each  of  such  corporations, 
if  any  there  be,  together  with  such  agent's  place  of  ad- 
dress, and  shall  within  ten  days  from  and  after  the  com- 
pilation of  such  assessment,  make  out  and  deliver  to  the 
county  auditor  of  his  county,  a  full  and  complete  list 
of  the  names  of  such  corporations  doing  business  in  his 
counties,  together  with  the  nature  of  the  business  so  car- 
ried on  by  each  of  such  corporations,  and  the  name  of 
the  resident  agent  of  each  of  such  corporations,  if  any 
there  be,  and  the  place  of  residence  of  each  of  such  agents. 

p.  c.  §  7219. 

B.  C.  §  4295. 
1  H.  C.  §  1528. 

County  auditors  report  to  state  auditors. 

§  59.  It  shall  be  the  duty  of  each  and  every  county 
auditor  in  this  state  to  make  out  and  transmit  to  the  secre- 
tary of  state,  within  thirty  days  next  preceding  the  re- 
ceipt by  him  from  such  county  assessor,  the  lists  provided 


LEGISLATIVE  PROVISIONS.  73 

in  section  2482  (Sec.  58),  a  full,  true  and  concise  statement 
of  the  names  of  such  corporations,  their  place  of  business, 
the  nature  of  business  conducted  by  such  corporations,  to- 
gether with  the  names  of  each  and  every  agent  of  each 
of  such  corporations,  if  any  there  be,  and  the  places  of 
residence  of  such  agents. 

p.  c.  §  7220. 

B.  C.  §  4296. 
1  H.  C.  §  1529. 

Fees. 

§  60.  The  fees  for  recording,  under  the  provisions  of 
this  act,  shall  be  the  same  as  are  allowed  by  law  to  the 
secretary  of  state,  for  certified  copies  of  papers  on  file  in 
his  office. 

p.  c.  §  7221. 

B.  C.  §  4297. 
1  H.  C.  §  1530. 

Agent's  liability. 

§  61.  Any  agent  of  any  foreign  corporation,  conduct- 
ing or  carrying  on  business  within  the  limits  of  this  state, 
for  and  in  the  name  of  such  corporation,  contrary  to 
any  of  the  provisions  of  this  act,  shall  be  deemed  guilty 
of  a  misdemeanor,  and,  upon  conviction  thereof,  shall 
be  punished  by  a  fine  not  exceeding  two  hundred  dollars, 
or  by  imprisonment  in  the  county  jail  for  a  term  not  ex- 
ceeding three  months,  or  by  both  such  fine  and  imprison- 
ment. 

p.  c.  §  7222. 

B.  C.  §  4298. 
1  H.  C.  §  1531. 


74  LEGISLATIVE  PROVISIONS. 

County  officers  liability. 

§  62.  Any  county  assessor  failing  to  make  out  and 
deliver  to  the  county  auditor  of  his  county  a  list  within 
the  time  and  in  the  manner  provided  in  section  2485  (Sec. 
61),  and  any  county  auditor  failing  to  make  out  and  trans- 
mit to  the  secretary  of  state  a  statement,  within  the  time 
and  in  the  manner  provided  in  section  2482  (Sec.  58), 
shall  be  deemed  guilty  of  a  misdemeanor,  and,  upon  con- 
viction thereof,  shall  be  punished  by  a  fine  not  exceeding 
three  hundred  dollars. 

P.  C.  §  7223. 
B.  C.  §  4299. 
1  H.  C.  §  1532. 

Water  power  companies  may  condemn. 

§  63.  The  right  of  eminent  domain  for  the  purpose 
of  appropriating  real  estate  is  hereby  extended  to  all 
corporations  that  are  now  or  that  may  hereafter  be  in- 
corporated under  the  laws  of  this  state,  or  of  any  state  or 
territory  of  the  United  States  and  doing  business  in  this 
state,  for  the  purpose  of  conveying  water  by  ditches, 
flumes,  pipe  lines,  tunnels  or  any  other  means  for  the 
utilization  of  water  power:  Provided,  however,  that 
said  right  of  eminent  domain  shall  not  be  exercised  in 
respect  to  any  residence  or  business  structure  or  struc- 
tures. 

Laws  '01,  p.  299. 
P.  C.  §  5155. 

Preliminary  survey. 

§  64.  Every  corporation  that  is  now  or  that  may  here- 
after be  incorporated  under  the  laws  of  this  state  or  of 


LEGISLATIVE  PROVISIONS.  75 

any  other  state  or  territory  of  the  United  States  and  do- 
ing business  in  this  state,  for  the  purpose  of  conveying 
water  by  ditches,  flumes,  pipe  lines,  tunnels  or  any  other 
means  for  the  utilization  of  water  power,  shall  have  the 
right  to  enter  upon  any  land  between  the  termini  of  the 
proposed  ditches,  flumes,  pipe  lines,  tunnels  or  any  other 
means  for  the  utilization  of  water  power,  for  the  pur- 
pose of  examining,  locating  and  surveying  such  ditches, 
flumes,  pipe  lines,  tunnels  or  any  other  means  for  the 
utilization  of  water  power,  doing  no  unnecessary  damage 
thereby. 

P.  C.  §  5156. 

The  usual  procedure. 

§  65.  Every  such  corporation  shall  have  the  right, 
subject  to  the  proviso  contained  in  section  1  (Sec.  63) 
hereof,  to  appropriate  real  estate  or  other  property  for  a 
right-of-way  for  such  ditches,  flumes,  pipe  lines,  tunnels 
or  other  means  of  conveying  water,  and  for  any  other 
corporate  purposes,  in  the  same  manner  and  under  the 
same  procedure  as  now  is  or  may  be  hereafter  provided 
by  law  in  the  case  of  other  corporations  authorized  by 
the  laws  of  the  state  to  exercise  the  right  of  eminent 
domain. 

P.  C.  §  5157. 

Corporations  prior  to  1872  may  hold  property. 

§  66.  That  all  private  corporations  incorporated  by 
the  legislative  assembly  of  the  Territory  of  Washington 
prior  to  the  10th  day  of  June,  1872,  other  than  for  relig- 
ious purposes,  be  and  they  are  hereby  authorized  to  hold, 
acquire,  own  and  possess  real  and  personal  property  to 
the  extent  and  to  such  an  amount  as  to  said  corporations 


76  LEGISLATIVE  PROVISIONS. 

may  seem  meet;  anything  in  the  acts  incorporating  said 
private  corporations  to  the  contrary  notwithstanding. 

P.  C.  §  7108. 
B.  C.  §  4254. 
1  H.  C.  §  1501. 

Corporations  prior  to  1862  may  make  and  secure  debts. 

§  67.  That  all  private  corporations  incorporated  by 
the  legislative  assembly  of  the  Territory  of  Washington 
prior  to  the  first  day  of  January,  1862,  other  than  cor- 
porations created  for  religious  purposes,  be  and  they 
hereby  are  authorized  (and)  empowered  to  issue  notes, 
bonds,  mortgages  or  other  evidences  of  indebtedness  and 
to  secure  payment  of  the  same  by  mortgage,  trust  deed 
or  otherwise  incumbering  any  real  estate  or  personal 
property  owned  by  said  corporation.  Said  corporations 
shall  have  the  power  to  buy,  sell  or  otherwise  deal  in 
notes,  bonds  and  stock  of  other  corporations,  and  shall 
have  power  through  their  duly  authorized  officers  to  exe- 
cute any  and  all  instruments  necessary  to  carry  out  the 
powers  conferred  upon  said  corporations  by  the  provi- 
sions of  this  act. 

P.  C.  §  7109. 
B.  C.  §  4267. 

Laborer's  lien  on  property  of  corporation — Priorities. 

§  68.  Every  person  performing  labor  for  any  person, 
company  or  corporation,  in  the  operation  of  any  railway, 
canal  or  transportation  company,  or  any  water,  mining 
or  manufacturing  company,  sawmill,  lumber  or  timber 
company,  shall  have  a  prior  lien  on  the  franchise,  earn- 
ings, and  on  all  the  real  and  personal  property  of  said 


LEGISLATIVE  PROVISIONS.  77 

person,  company  or  corporation,  which  is  used  in  the 
operation  of  its  business  to  the  extent  of  the  moneys  due 
him  from  such  person,  company  or  corporation,  operat- 
ing said  franchise  or  business,  for  labor  performed  with- 
in six  months  next  preceding  the  filing  of  this  claim  there- 
for, as  hereinafter  provided;  and  no  mortgage,  deed  of 
trust  or  conveyance  shall  defeat  or  take  precedence  over 
said  lien. 

P.  C.  §  6133. 

B.  C.  §  5919. 

Fitch  v.  Applegate,  24  Wash.  25;  64  Pac.  147. 

Blumauer  v.  Clock,  24  Wash.  596;  64  Pac.  844. 

In  re  Lawler,  110  Fed.  135. 


Notice  of  claim. 

§  69.  No  person  shall  be  entitled  to  the  lien  given  by 
the  preceding  section,  unless  he  shall,  within  ninety  days 
after  he  has  ceased  to  perform  labor  for  such  person, 
company  or  corporation,  filed  for  record  with  the  county 
auditor  of  the  county  in  which  said  labor  was  performed, 
or  in  which  is  located  the  principal  office  of  such  person, 
company  or  corporation  in  this  state,  a  notice  of  claim, 
containing  a  statement  of  his  demand,  after  deducting 
all  just  credits  and  offsets,  the  name  of  the  person,  com- 
pany or  corporation,  and  the  name  of  the  person  or  per- 
sons employing  claimant,  if  known,  with  the  statement  of 
the  terms  and  conditions  of  his  contract,  if  any,  and  the 
time  he  commenced  the  employment,  and  the  date  of  his 
last  service,  and  shall  serve  a  copy  thereof  on  said  per- 
son, company  or  corporation  within  thirty  days  after  the 
same  is  so  filed  for  record. 

B.  c.  §  5920. 

P.  C.  §  6134. 


78  LEGISLATIVE  PROVISIONS. 

Service  as  in  summons. 

§  70.  Service  of  notice,  as  herein  required,  may  be 
made  in  the  same  manner  as  summons  in  civil  actions. 

P.  C.  §  6135. 
B.  C.  §  5921. 

Foreclosure  of  lien. 

§  71.  Any  such  lien  may  be  enforced  within  the  same 
time  and  in  the  same  manner  as  mechanics '  liens  are  fore- 
closed. 

P.  C.  §  6136. 
B.  C.  §  5922. 

Payment  by  receiver. 

§  72.  Whenever  a  receiver  or  assignee  is  appointed 
for  any  person,  company  or  corporation,  the  court  shall 
require  such  receiver  or  assignee  to  pay  all  claims  for 
which  a  lien  could  be  filed  under  this  act,  before  the  pay- 
ment of  any  other  debts  or  claims  other  than  operating 
expenses. 

P.  C.  §  6137. 
B.  C.  5923. 

/ 

Any  person  failing  to  give  list — Penalty. 

§  73.  If  any  person  or  corporation  shall  give  a  false 
or  fraudulent  list,  schedule  or  statement  required  by  this 
act,  or  shall  fail  or  refuse  to  deliver  to  the  assessor,  when 
called  on  for  that  purpose,  a  list  of  the  taxable  personal 
property  which  he  is  required  to  list  under  this  act,  he  or 
it  shall  be  liable  to  a  penalty  of  not  less  than  ten  dollars 
nor  more  than  two  thousand  dollars,  to  be  recovered  in 
any  proper  form  of  action  in  the  name  of  the  State  of 


LEGISLATIVE  PROVISIONS.  79 

Washington  on  the  complaint  of  any  person,  such  fine, 
when  collected,  to  be  paid  into  the  county  treasury  to  the 
credit  of  the  general  fund. 

P.  C.  §  8633. 
B.  C.  §  1697. 

Fee  for  corporate  articles. 

§  74.  Every  corporation  incorporated  under  the  laws 
of  this  state,  or  of  any  state  or  territory  of  the  United 
States,  or  of  any  foreign  state,  having  a  capital  stock 
divided  into  shares,  shall  pay  to  the  secretary  of  the 
state,  for  the  use  of  the  state,  the  following  fees :  Every 
corporation  having  a  capital  stock,  $10 ;  the  said  fee  to  be 
due  and  payable  upon  the  filing  of  the  articles  of  incor- 
poration in  the  officfe  of  the  secretary  of  state,  and  no 
such  corporation  shall  have  or  exercise  any  corporate 
powers,  or  be  permitted  to  do  any  business  in  this  state, 
until  the  said  fees  shall  have  been  paid,  and  the  secretary 
of  state  shall  not  file  any  articles  of  incorporation  or  their 
equivalent  or  give  any  certificate  thereof,  until  the  said 
fees  shall  have  been  paid. 

P.  C.  §  8467. 
B.  C.  §  4285. 

Supplemental  articles. 

§  75.  Every  corporation  desiring  to  file  articles  amend- 
atory or  supplemental,  or  certificate  of  increase  or  de- 
crease of  capital  stock,  shall  pay  to  the  secretary  of  state, 
for  the  use  of  the  state,  the  fee  of  ten  dollars. 

P.  C.  §  8468. 
B.  C.  §  4286. 


80  LEGISLATIVE  PROVISIONS. 

Certified  copies. 

§  76.  The  secretary  of  state  shall  charge  for  making 
a  copy  of  any  law,  resolution,  record  or  other  document 
or  paper  on  file  in  his  office  fifteen  cents  per  folio ;  pro- 
vided, no  copy  shall  be  furnished  by  the  secretary  of  state 
unless  under  seal  of  the  state,  and  shall  charge  for  any 
certificate  under  seal  of  state,  two  dollars. 

Laws  1903,  p.  297. 

Note. — This  fee  bill  repeals  sec.  8469  P.  C.  or  sec.  4287  B.  C. 


Folio  charge. 

§  77.     The  secretary  of  state  shall  charge  for  recording 
articles  of  incorporation  fifteen  cents  per  folio. 

Laws  1903,  p.  297. 

This  section  repeals  law  heretofore  in  effect  found  in  sec.  8470  P.  C.  or 
sec.  4288  B.  C. 


Annual  tax — Penalty. 

§  78.  Every  corporation  incorporated  under  the  laws 
of  this  state,  and  every  foreign  corporation  having  its 
articles  of  incorporation  on  file  in  the  office  of  the  sec- 
retary of  state  shall,  on  or  before  the  first  day  of  July 
of  each  and  every  year,  pay  to  the  secretary  of  state,  for 
the  use  of  the  state,  the  following  license  fees:  Every 
corporation  having  a  capital  stock,  ten  dollars.  Every 
corporation  failing  to  pay  the  said  annual  license  fee,  on 
or  before  the  first  day  of  July  of  each  and  every  year, 
and  desiring  to  pay  the  same  thereafter,  and  before  the 
first  day  of  January  next  following,  shall  pay  to  the  sec- 
retary of  state,  for  the  use  of  the  state,  in  addition  to  the 


LEGISLATIVE  PROVISIONS.  81 

said  license  fee,  the  following  further  fee,  as  a  penalty 
for  such  failure :  Every  corporation,  two  dollars  and  fif- 
ty cents.  Every  corporation  failing  to  pay  the  said  li- 
cense fees  and  penalties  on  or  before  the  thirty-first  day 
of  December  of  any  year  shall  forfeit  the  sum  of  five 
dollars  for  every  day  which  it  shall  continue  to  do  busi- 
ness as  a  corporation  after  said  date,  to  be  recovered  in 
an  action  in  any  court  of  competent  jurisdiction. 

P.  C.  §  8471. 

B.  C.  §  4289. 

State  ex  rel.  Sterling  Timber  Co.  v.  Jenkins,  22  Wash.  494 ;  61  Pac.  141. 

Annual  license  fee  of  ten  dollars  merely  an  excise  upon  right  of  cor- 
poration to  exist  and  does  not  supersede  the  right  to  tax  the  franchise 
of  the  corporation. 

Chehalis  Boom  Co.  v.  Chehalis  County,  24  Wash.  135;  63  Pac.  1123. 


Certain  corporations  excepted. 

§  79.  This  act  shall  not  apply  to  corporations  not  for 
pecuniary  profit,  or  to  corporations  organized  for  reli- 
gious, social,  fraternal,  charitable,  benevolent  or  educa- 
tional purposes,  nor  to  such  insurance  companies  as  are 
required  to  pay  an  annual  license  under  the  insurance 
laws  of  this  state. 

P.  C.  §  8472. 
B.  C.  §  4290. 


An  act  to  prevent  the  duplication  of  corporate  entitlements. 

§  80.  Private  corporations  may  be  formed  in  the  man- 
ner prescribed  by  the  laws  of  this  state  governing  cor- 
porations for  any  purpose  for  which  individuals  may 
lawfully  associate.  No  corporation  shall  take  the  name 
of  a  corporation  theretofore  [heretofore]  organized  un- 
der the  laws  of  this  state,  nor  of  any  foreign  corporation 

6  D 


82  LEGISLATIVE  PROVISIONS. 

having  complied  with  the  laws  of  this  state,  nor  one  so 
nearly  resembling  the  name  of  such  other  corporation  as 
to  be  misleading.  The  secretary  of  state  shall  refuse  to 
file  said  articles  of  incorporation  of  any  associattion  or 
corporation  violating  the  provisions  of  this  act. 

Laws  1903,  p.  124. 


An  act  to  protect  stockholders  in  corporations. 

§  81.  Any  superintendent,  director,  secretary,  manag- 
er, agent,  or  other  officer  of  any  corporation  formed  or 
existing  under  the  laws  of  this  state,  or  transacting  busi- 
ness in  this  state,  or  any  person  pretending  or  holding 
himself  out  as  such  superintendent,  director,  secretary, 
manager,  agent  or  other  officer,  who  shall  wilfully  sub- 
scribe, sign,  indorse,  verify  or  otherwise  assent  to  the 
publication,  either  generally  or  privately,  to  the  stock- 
holders or  to  other  persons  dealing  with  such  corporation, 
or  its  stock,  any  wilfully  untrue  and  fraudulently  exag- 
gerated report,  prospectus,  account,  statement  of  oper- 
ations, values,  business  profits,  expenditures,  or  pros- 
pects, or  other  paper  or  document  intended  to  produce 
or  give,  or  having  a  tendency  to  produce  or  give,  to  the 
shares  of  stock  in  such  corporation  a  greater  value  than 
they  really  possess,  or  with  the  intention  of  defrauding 
any  particular  person  or  persons,  or  the  public  or  persons 
generally,  shall  be  deemed  guilty  of  an  offense  against 
the  laws  of  the  State  of  Washington,  and,  upon  convic- 
tion thereof,  shall  be  punished  by  imprisonment  in  the 
penitentiary,  not  less  than  one  or  more  than  five  years,  or 
in  the  county  jail  not  more  than  one  year,  or  by  a  fine  not 
exceeding  two  thousand  dollars,  or  both. 

Laws  1903,  p.  141. 


LEGISLATIVE  PROVISIONS.  33 

Acknowledgment,  certificate  of. 

§  82.  Certificates  of  acknowledgment  of"  an  instru- 
ment acknowledged  by  a  corporation  substantially  in  the 
following  form,  shall  be  sufficient : 

State  of "j 

L     ss. 

County  of J 

On  this day  of ,  A.  D.  190 — ,  before  me 

personally  appeared ,  to  me 

known  to  be  the  (president,  vice  president,  secretary, 
treasurer,  or  other  authorized  officer  or  agent,  as  the  case 
may  be)  of  the  corporation  that  executed  the  within  and 
foregoing  instrument,  and  acknowledged  the  said  instru- 
ment to  be  the  free  and  voluntary  act  and  deed  of  said 
corporation,  for  the  uses  and  purposes  therein  mentioned, 
and  on  oath  stated  that  he  was  authorized  to  execute  said 
instrument  and  that  the  seal  affixed  is  the  corporate  seal 
of  said  corporation. 

In  witness  whereof,  I  have  hereunto  set  my  hand  and 
affixed  my  official  seal  the  day  and  year  first  above  writ- 
ten. 

(Signature  and  Title  of  Officer.) 

Laws  1903,  p.  245. 

The  fact  that  a  notary  public  is  an  officer  in  a  corpora- 
tion to  which  a  mortgage  is  given  would  not  bar  him  from, 
taking  the  acknowledgment. 

Keene  Guaranty  Savings  Bank  v.  Lawrence,  32  Wash.  572;  73  Pac.  680. 

How  tax  to  be  paid  on  corporate  stock. 

§  83.  If  a  foreign  executor,  administrator  or  trustee 
shall  assign  any  corporate  stock  or  obligations  in  this 
Acknowledgment,  certificate  of. 


g4  LEGISLATIVE  PROVISIONS. 

state  standing  in  the  name  of  a  decedent,  or  in  trust  for 
a  decedent,  liable  to  such  tax,  the  tax  shall  be  paid  to 
the  state  treasurer  on  or  before  the  transfer  thereof; 
otherwise,  the  corporation  permitting  its  stock  to  be  so 
transferred  on  its  books  shall  be  liable  to  pay  such  tax, 
and  it  is  the  duty  of  the  state  treasurer  to  enforce  the 
payment  thereof. 

P.  C.  §  8755. 
Laws  1901,  p.  73. 

Agent  of  corporation  to  make  list. 

§  84.  The  president,  secretary  or  principal  accounting 
officer  or  agent  of  any  company  or  association,  whether 
incorporated  or  unincorporated,  except  as  otherwise  pro- 
vided for  in  this  act,  shall  make  out  and  deliver  to  the 
assessor  a  sworn  statement  of  its  property,  setting  forth 
particularly:  First,  the  name  and  location  of  the  com- 
pany or  association;  second,  the  real  property  of  the 
company  or  association,  and  where  situated;  third,  the 
nature  and  value  of  its  personal  property.  The  real  and 
personal  property  of  such  company  or  association  shall 
be  assessed  the  same  as  other  real  and  personal  property. 
In  all  cases  of  failure  or  refusal  of  any  person,  officer, 
company  or  association  to  make  such  return  or  statement, 
it  shall  be  the  duty  of  the  assessor  to  make  such  return 
or  statement  from  the  best  information  he  can  obtain. 

P.  C.  §  8612. 

B.  C.  §  1676. 

Ridpath  v.  Spokane  County,  23  Wash.  436;  63  Pac.  261. 

Lewistown  Water  Co.  v.  Asotin  County,  24  Wash.  371;  64  Pac.  544. 

Pacific  Nat.  Bank  v.  Pierce  County,  20  Wash.  675;  56  Pac.  936. 


LEGISLATIVE  PROVISIONS.  35 

Payment  by  corporation. 

§  85.  Every  such  bank  or  other  corporation  shall  pay 
to  the  collector,  or  other  person  authorized  to  collect  the 
taxes  of  the  state,  county,  city  or  town  in  which  the  same 
is  located,  at  the  time  in  each  year  when  other  taxes  as- 
sessed in  the  said  state,  county,  city  or  town  become  due, 
the  amount  of  the  tax  so  assessed  in  each  year  upon  the 
shares  in  such  bank  or  other  corporation.  If  such  tax 
is  not  so  paid,  the  said  bank  or  other  corporation  shall 
be  liable  for  the  same. 

P.  C.  §  8614. 
B.  C.  §  1678. 

Tax  a  lien — Foreclosure. 

§  86.  The  shares  of  such  banks  or  other  corporations 
shall  be  subject  to  the  tax  paid  thereon  by  the  corporation 
or  by  the  officers  thereof,  and  the  corporation  and  officers 
thereof  shall  have  a  lien  on  all  the  shares  in  such  bank 
or  other  corporation  and  on  all  the  rights  and  property 
of  the  shareholders  in  the  corporate  property  for  the  pay- 
ment of  said  taxes,  which  lien  may  be  foreclosed  by  a  sim- 
ilar proceeding  as  under  chattel  mortgages,  and  the  said 
tax,  with  interest  thereon  at  the  rate  of  fifteen  per  cent 
per  annum  from  the  day  when  the  tax  became  due,  to- 
gether with  a  reasonable  attorney's  fee,  may  be  recov- 
ered as  in  a  civil  action  brought  by  the  treasurer  of  such 
county. 

P.  C.  §  8615. 
B.  C.  §  1679. 

Who  may  serve  summons. 

§  87.  In  all  cases,  except  when  service  is  made  by  pub- 
lication, as  hereinafter  provided,  the  summons  shall  be 


86  LEGISLATIVE  PROVISIONS. 

served  by  the  sheriff  of  the  county  wherein  the  service  is 
made  or  by  his  deputy,  or  by  any  person  over  twenty-one 
years  of  age,  who  is  competent  to  be  a  witness  in  the  ac- 
tion, other  than  the  plaintiff. 

p.  c.  §  331. 

B.  C.  §  4874. 

Washington  Mill  Co.  v.  Marks,  27  Wash.  170;  67  Pac.  5«5. 


Manner  of  service. 

§  88.  The  summons  shall  be  served  by  delivering  a 
copy  thereof  as  follows : 

If  against  a  railroad  corporation,  to  any  station, 
freight,  ticket  or  other  agent  thereof  within  the  state. 

If  against  a  corporation  owning  or  operating  sleeping 
cars,  or  hotel  cars,  to  any  person  having  charge  of  any 
of  its  cars  or  any  agent  found  within  the  state. 

If  against  an  insurance  company,  to  any  agent  au- 
thorized by  such  company  to  solicit  insurance  within  this 
state. 

If  against  a  company  or  corporation  doing  any  express 
business,  to  any  agent  authorized  by  said  company  or  cor- 
poration to  receive  and  deliver  express  matters  and  collect 
pay  therefor  within  this  state. 

If  the  suit  be  against  a  company  or  corporation  other 
than  those  designated  in  the  preceding  subdivisions  of 
this  section,  to  the  president  or  other  head  of  the  com- 
pany or  corporation,  secretary,  cashier  or  managing 
agent  thereof. 

If  the  suit  be  against  a  foreign  corporation  or  non- 
resident joint  stock  company  or  association  doing  busi- 
ness within  this  state,  to  any  agent,  cashier  or  secretary 
thereof. 


LEGISLATIVE  PROVISIONS.  87 

P.  C.  §  332. 

B.  C.  §  4875. 

Osborne  v.  Columbia  County  Farmers  Alliance  Corporation,  9  Wash. 
666;  38  Pac.  160. 

Sievers  v.  Dalles,  etc.,  Co.,  24  Wash.  302;  64  Pac.  539. 

Zindorf  v.  Western  American  Co.,  26  Wash.  695;  67  Pac.  355. 

Carstens  &  Earles  v.  Leidigh,  etc.,  Lumber  Co.,  18  Wash.  450 ;  51  Pac. 
1051;  63  Am.  St.  906;  39  L.  R.  A.  548. 

Paxton  v.  Daniel,  1  Wash.  19;  23  Pac.  441. 

Sayward  v.  Carlson,  1  Wash.  29;  23  Pac.  830. 

Service  of  summons  on  receiver. 

§  89.  That  whenever  any  domestic  or  foreign  corpo- 
ration, which  has  been  doing  business  in  this  state,  has 
been  placed  in  the  hands  of  a  receiver  and  the  receiver  is 
in  possession  of  any  of  the  property  or  assets  of  such 
corporation  service  of  all  process  upon  such  corporation 
may  be  made  upon  the  receiver  thereof. 

p.  c.  333. 

B.  C.  §  4875. 

Service  on  defunct  domestic  corporation. 

§  90.  Whenever  any  corporation,  created  by  the  laws 
of  this  state,  or  late  Territory  of  Washington,  does  not 
have  an  officer  in  this  state  upon  whom  legal  service  of 
process  can  be  made,  an  action  or  proceeding  against 
such  corporation  may  be  commenced  in  any  county  where 
the  cause  of  action  may  arise,  or  said  corporation  may 
have  property,  and  service  may  be  made  upon  such  cor- 
poration by  depositing  a  copy  of  the  summons,  writ,  or 
other  process,  in  the  office  of  the  secretary  of  state,  which 
shall  be  taken,  deemed  and  treated  as  personal  service  on 
such  corporation:  Provided,  a  copy  of  said  summons, 
writ,  or  other  process,  shall  be  deposited  in  the  postoffice, 
postage  paid,  directed  to  the  secretary  or  other  proper 


88  LEGISLATIVE  PROVISIONS. 

officer  of  such  corporation,  at  the  place  where  the  main 
business  of  such  corporation  is  transacted,  when  such 
place  of  business  is  known  to  the  plaintiff,  and  be  pub- 
lished at  least  once  a  week  for  six  weeks  in  some  news- 
paper printed  and  published  at  the  seat  of  government  of 
this  state,  before  such  service  shall  be  deemed  perfect. 

p.  c.  §  334. 

B.  C.  §  4876. 

Service  by  publication. 

§  91.  When  the  deefndant  cannot  be  found  within  the 
state,  of  which  the  return  of  the  sheriff  of  the  county  in 
which  the  action  is  brought,  that  the  defendant  cannot 
be  found  in  the  county,  is  prima  facie  evidence,  and  upon 
the  filing  of  an  affidavit  of  the  plaintiff,  his  agent  or  at- 
torney, with  the  clerk  of  the  court,  stating  that  he  believes 
that  the  defendant  is  not  a  resident  of  the  state,  or  cannot 
be  found  therein,  and  that  he  has  deposited  a  copy  of  the 
summons  and  complaint  in  the  postoffice,  directed  to  the 
defendant  at  his  place  of  residence,  unless  it  is  stated  in 
the  affidavit  that  such  residence  is  not  known  to  the  affi- 
ant, and  stating  the  existence  of  one  of  the  cases  herein- 
after specified,  the  service  may  be  made  by  publication  of 
the  summons,  by  the  plaintiff  or  his  attorney  in  either 

of  the  following  cases : 

********** 

When  the  defendant  is  a  foreign  corporation  and  has 
property  within  the  state. 

When  the  action  is  against  any  corporation,  whether 
private  or  municipal,  organized  under  the  laws  of  this 
state  and  the  proper  officers  on  whom  to  make  service  do 
not  exist  or  cannot  be  found. 

P.  C.  §  335. 
B.  C.  §  4877. 


LEGISLATIVE  PROVISIONS.  39 

Information  against  usurpation  of  public  functions. 

§  92.  An  information  may  be  filed  against  any  person 
or  corporation  in  the  following  cases : 

1.  When  any  person  shall  usurp,  intrude  upon,  or  un- 
lawfully hold  or  exercise  any  public  office  or  franchise 
within  the  state,  or  any  office  in  any  corporation  created 
by  the  authority  of  the  state. 

#*##*####* 

3.  When  several  persons  claim  to  be  entitled  to  the 
same  office  or  franchise,  one  information  may  be  filed 
against  any  or  all  such  persons  in  order  to  try  their  re- 
spective rights  to  the  office  or  franchise. 

4.  When  any  association  or  number  of  persons  shall 
act  within  this   sta^e  as  a  corporation,  without  being 
legally  incorporated. 

5.  Or  where  any  corporation  does,  or  omits  acts  which 
amount  to  a  surrender  or  a  forfeiture  of  their  rights  and 
privileges  as  a  corporation,  or  where  they  exercise  powers 
not  conferred  by  law. 

P.  C.  §  1434. 
B.  C.  §  5780. 
2  H.  C.  §  679. 

State  ex  rel.  Atty.  Genl.  v.  Seattle  Gas  Co.,  28  Wash.  488;  68  Pac.  946. 
State  ex  rel  .Mitchell  v.  Horan,  22  Wash.  197;  60  Pac.  135.    Cited  in 
Standard  Gold  Mining  Co.  v.  Byers,  31  Wash.  100;  71  Pac.  767. 

Who  may  file  information. 

§  93.  The  information  may  be  filed  by  the  prosecuting 
attorney  in  the  superior  court  of  the  proper  county,  upon 
his  own  relation,  whenever  he  shall  deem  it  his  duty  to 
do  so,  or  shall  be  directed  by  the  court  or  other  competent 


90  LEGISLATIVE  PROVISIONS. 

authority,  or  by  any  other  person  on  his  own  relation, 
whenever  he  claims  an  interest  in  the  office,  franchise  or 
corporation  which  is  the  subject  of  the  information. 

P.  C.  §  1435. 
B.  C.  §  5781. 
2  H.  C.  §  680. 


Judgment  of  ouster  of  franchise  or  office  in  corporations — 
Costs. 

§  94.  Whenever  any  defendant  shall  be  found  guilty 
of  any  usurpation  of  or  intrusion  into,  or  unlawfully  ex- 
ercising any  office  or  franchise  within  this  state,  or  any 
office  in  any  corporation  created  by  the  authority  of  this 
state,  or  when  any  public  officer  thus  charged  shall  be 
found  guilty  of  having  done  or  suffered  any  act  which 
by  the  provisions  of  the  law  shall  work  a  forfeiture  of 
his  office,  or  when  any  association  or  number  of  persons 
shall  be  found  guilty  of  having  acted  as  a  corporation 
without  having  been  legally  incorporated,  the  court  shall 
give  judgment  of  ouster  against  the  defendant  or  defend- 
ants, and  exclude  him  or  them  from  the  office,  franchise 
or  corporate  rights,  and  in  case  of  corporations  that  the 
same  shall  be  dissolved,  and  the  court  shall  adjudge  costs 
in  favor  of  the  plaintiff. 

P.  C.  §  1443. 
B.  C.  §  5789. 
2  H.  C.  §  688. 

Remedy  against  usurpers  of  corporate  rights. 

§  95.  If  judgment  be  rendered  against  any  corpora- 
tion or  against  any  persons  claiming  to  be  a  corpo- 
ration, the  court  may  cause  the  costs  to  be  collected  by 


LEGISLATIVE  PROVISIONS.  91 

executions  against  the  persons  claiming  to  be  a  corpora- 
tion or  by  attachment  against  the  directors  or  other  of- 
ficers of  the  corporation,  and  shall  restrain  the  corpo- 
ration, appoint  a  receiver  of  its  property  and  effects,  take 
an  account  and  make  a  distribution  thereof  among  the 
creditors.  The  prosecuting  attorney  shall  immediately 
institute  proceedings  for  that  purpose. 

P.  C.  §  1444. 
B.  C.  §  5790. 
2  H.  C.  §  689. 

State  ex  rel.  v.  Superior  Court,  15  Wash.  668,  701;  47  Pac.  31,  1103; 
55  Am.  St.  907;  37  L.  R.  A.  111. 


Alien  ownership  of  lands. 

§  96.  The  ownership  of  lands  by  aliens  other  than 
those  who  in  good  faith  have  declared  their  intention  to 
become  citizens  of  the  United  States  is  prohibited  in  this 
state,  except  where  acquired  by  inheritance  under  mort- 
gage or  in  good  faith  in  the  ordinary  course  of  justice 
in  the  collection  of  debts;  and  all  conveyances  of  lands 
hereafter  made  to  any  alien  directly  or  in  trust  for  such 
alien  shall  be  void:  Provided,  that  the  provisions  of 
this  section  shall  not  apply  to  lands  containing  valuable 
deposits  of  minerals,  metals,  iron,  coal,  or  fire  clay,  and 
the  necessary  land  for  mills  and  machinery  to  be  used  in 
the  development  thereof  and  the  manufacture  of  the  pro- 
ducts therefrom.  Every  corporation,  the  majority  of  the 
capital  stock  of  which  is  owned  by  aliens,  shall  be  con- 
sidered an  alien  for  the  purposes  of  this  prohibition. 

Art.  II,  Sec.  33,  Const. 

(Omitted  by  mistake  from  constitutional  provisions.) 

State  ex  rel.  Winston  v.  Morrison,  18  Wash.  664;  52  Pac.  228. 


92  LEGISLATIVE  PROVISIONS. 

State  ex  rel.  Winston  v.  Hudson  Land  Co.,  19  Wash.  85;  52  Pac.  574; 
40  L.  R.  A.  430. 

Oregon  Mortgage  Co.  v.  Carstens,  16  Wash.  165;  47  Pac.  421;  35  L.  R. 
A.  841. 

Goon  Gan  v.  Richardson,  16  Wash.  373;  47  Pac.  762. 

Brigham  v.  Kenyon,  76  Fed.  Rep.  30. 


Fraternal  societies — Agent  in  this  state. 

§  97.  Each  such  association  now  doing  business  or 
hereafter  admitted  to  do  business  within  this  state  and 
not  having  its  principal  office  within  this  state,  and  not 
being  organized  under  the  laws  of  this  state,  shall  ap- 
point, in  writing,  the  commissioner  of  insurance  and  his 
successors  in  office  to  be  its  true  and  lawful  attorney, 
upon  whom  all  lawful  process  in  any  action  or  proceed- 
ing against  it  must  be  served,  and  in  such  writing  shall 
agree  that  any  lawful  process  against  it  which  is  served 
on  said  attorney  shall  be  of  the  same  legal  force  and 
validity  as  if  served  upon  the  association,  and  that  the 
authority  shall  continue  in  force  so  long  as  any  liability 
remains  outstanding  in  this  state.  Copies  of  such  cer- 
tificate, certified  by  said  commissioner  of  insurance,  shall 
be  deemed  sufficient  evidence  thereof,  and  shall  be  ad- 
mitted in  evidence  with  the  same  force  and  effct  as  the 
original  thereof  might  be  admitted.  Service  upon  such 
attorney  shall  be  deemed  sufficient  service  upon  such  asso- 
ciation. 

When  legal  process  against  any  such  association  is 
served  upon  said  commissioner  of  insurance,  he  shall  im- 
mediately notify  the  association  of  such  service  by  let- 
ter, prepaid  and  directed  to  its  secretary  or  correspond- 
ing officer,  and  shall  within  two  days  after  such  service 
forward  in  the  same  manner  a  copy  of  the  process  served 
on  him  to  such  officer.  The  plaintiff  in  such  process  so 


LEGISLATIVE  PROVISIONS.  93 

served  shall  pay  to  the  commissioner  of  insurance,  at  the 
time  of  such  service,  a  fee  of  $3  which  shall  be  recovered 
by  him  as  part  of  the  taxable  costs,  if  he  prevails  in  the 
suit.  The  commissioner  of  insurance  shall  keep  a  record 
of  all  processes  served  upon  him,  which  record  shall  show 
the  day  and  hour  when  such  service  was  made. 

P.  C.  §  7194. 


Non-resident  insurance  companies  to  file  power  of  attorney. 

§  98.  No  insurance  company,  corporation  or  associa- 
tion organized  outside  of  this  state  shall  be  permitted  to 
do  business  in  this  state  until  such  organization  shall 
have  filed  with  the  commissioner  a  power  of  attorney 
which  shall  authorize  a  citizen  and  resident  of  this  state 
to  make  and  accept  service  in  any  proceedings  in  any 
court  in  this  state,  or  the  United  States  herein.  If  any 
attorney  of  any  insurance  organization,  appointed  under 
the  provisions  of  this  act,  shall  remove  from  the  state,  or 
become  disqualified  in  any  manner  from  accepting  serv- 
ice, and  if  any  citizen  or  resident  of  this  state  shall  have 
any  claim  by  virtue  of  any  insurance  policy  issued  by 
any  company  or  organization  not  represented  by  attor- 
ney in  this  state,  valid  service  may  be  made  on  such 
company  or  organization,  and  the  principal  agent  for 
the  Pacific  Coast,  enclosing  a  copy  of  the  service  by 
mail,  postpaid :  And  provided  further,  that  in  such  case 
no  proceeding  shall  be  had  within  forty  days  after  such 
service  on  the  commissioner. 

P.  C.  §  5631. 
B.  C.  §  2818. 


94  LEGISLATIVE  PROVISIONS. 

Private  corporations  may  be  sued  where  served  or  where  it 
has  office. 

§  99.  An  action  against  a  corporation  may  be  brought 
in  any  county  where  the  corporation  has  an  office  for  the 
transaction  of  business,  or  any  person  resides  upon  whom 
process  may  be  served  against  such  corporation,  unless 
otherwise  provided  in  this  code. 

p.  c.  §  3io. 

B.  C.  §  4854. 
2  H.  C.  §  160. 

Appointment  of  receiver. 

§  100.  A  receiver  may  be  appointed  by  the  court  in  the 
following  cases : 

********** 

Where  a  corporation  has  been  dissolved,  or  is  insol- 
vent, or  is  in  imminent  danger  of  insolvency,  or  has  for- 
feited its  corporate  rights. 

p.  c.  §  575. 

B.  C.  §  5456. 
2  H.  C.  §  326. 

EXPLANATORY  NOTE. 

Some  important  statutes,  by  reason  of  the  fact  that  they  are 
not  of  general  interest,  have  been  omitted.  Among  the  most 
important  of  these  are  the  statutes  on  eminent  domain,  Sees. 
5102-5109  P.  C.  Also,  Sees.  7088-7107  P.  C.  See,  also,  Sees. 
8613,  8615,  8616,  8617  P.  C.  Sec.  8613  P.  C.  amended  by  Laws 
1903,  P.  123. 


INDEX  TO  PART  I. 
CONSTITUTIONAL  AND  LEGISLATIVE  PROVISIONS. 


(References  are  to  sections.) 


Agent. 

Corporate  property,  must  furnish  list  of,  84. 
Foreign  corporation  must  appoint  a  resident,  55. 
Liability  of,  61. 

Alienation  of  franchise,  8. 

Amendments  to  articles  of  incorporation,  24. 

Articles  of  incorporation. 

Amendment  to,  24. 

Fee  for  filing  supplemental,  75. 

Fee  for  furnishing  certified  copies  of,  76. 

Evidence  of,  27. 

Filing  of,  24. 

Recording  fees  foreign  corporation,  60. 

Recording  fees  supplemental  articles,  75. 


96  INDEX  TO  PART  I. 

Assessor. 

County,  shall  report  for  taxation  property  of  foreign  cor- 
poration, 58. 

Failure  to  make  list  of  taxable  property  of  foreign  corpora- 
tion, 62. 

Auditor  of  county. 

Certificate  of,  prima  facie  evidence  of  incorporation,  27. 
Report  to  state  officer,  59. 

B 

Bank. 

Capital  stock,  amount  of,  34. 

Officers,  when  personally  liable,  12. 

Penalty  for  person  purporting  to  conduct  business  of,  38. 

Report  to  state  auditor,  38. 

Shares  in,  34. 

Benevolent  purposes. 

Corporations  organized  for,  excepted  from  taxes,  79. 

Books. 

Corporation,  transfer  of  stock  to  be  registered  on,  33. 
Inspection,  shall  be  open  to,  40. 
Trustees  to  keep,  40. 

Bonds. 

Limitations  on  issuance  of  stock  and,  6. 

By-laws. 

Corporations  may  make,  28. 


INDEX  TO  PART  I.  97 


Capital  stock. 
Change  of,  6. 

Division  and  distribution  of,  37. 
Increase  or  decrease  of,  42,43,44. 
Reduction  of,  37. 

Carriers. 

Combination  of  common,  prohibited,  14. 
Passengers  and  freight,  shall  connect  and  exchange,  13. 

Certificate. 

Acknowledgment  of  corporate  instruments,   82. 
Copy  of,  as  evidence  of  incorporation,  27. 

Certified  copies  of  articles. 

Fee  for  furnishing,  76. 

Charitable  corporations. 
Exempt  from  annual  license  fee,  79. 

Charters. 

Antedating  constitution  and  not  acted  upon,  without  force,  2. 
Forfeiture  of,  shall  not  be  remitted,  3. 

Claim. 

Notice  of  against  corporation,  69. 

Collateral. 

Holder  of  stock  as,  not  personally  liable,  39. 

Combinations. 

Incorporated  companies,  partnerships  or  associations,  pro- 
hibited, 22. 

Railroad  companies  and  common  carriers  prohibited  from 
entering  into,  14. 

7   D 


98  INDEX  TO  PART  I. 

Common  carriers. 

Combinations,  prohibited  from  entering,  14. 

Legislative  control,  subject  to,  13. 

Passengers  and  freight,  shall  connect  and  exchange,  13. 

Commission,  railroad,  18. 
Commutation  tickets,  15 

Companies  now  doing  business. 
Act  of  1890,  p.  290,  does  not  apply  to,  57. 

Condemnation  proceedings. 

Water  power  company's  right  of,  to,  63. 
Water  power  company,  by,  51. 

Consolidation. 

(Of)  railroad  company  with  competing  line  prohibited,  16. 

Corporate  powers. 

By  whom  exercised,  29. 

Corporate  property. 

Eminent  domain,  liable  to,  10. 

Corporate  stock. 
Tax  on,  how  paid,  83. 

Corporations. 

Certain  corporations  validated,  48. 
County  auditors  must  report  for  taxation,  59. 
May  be  sued  where  it  has  office  for  the  transaction  of  busi- 
ness, 99. 
Definition  of,  5. 
Formation  of  generally,  23. 
Prior  to  1862.  67. 
Prior  to  1872,  66. 
Taxation,  exempted  from,  what,  79. 


INDEX  TO  PART  I.  99 

County  assessor. 
Corporations,  shall  report,  for  taxation,  58. 

County  officers,  liability. 
Foreign  corporations,  failure  to  make  list  of,  62. 

Creation  of  corporations. 
Method  of,  1. 
Special  act,  cannot  be  by,  1. 

Creditors  of  corporation. 

Funds  of  corporation,  on  dissolution,  held  in  trust  for,  45. 


D 

Deposits. 

Bank  officer  receiving  after  knowledge  of  insolvency,  cre- 
ates personal  liability,  12. 

Discrimination. 
In  charges  or  facilities  prohibited,  15. 

Dissolution  of  corporations,  46. 
Funds  held  in  trust  for  creditors  on,  45. 
Receiver,  court  may  appoint,  100. 

Dividends. 
From  profits  only,  37. 

Duplication  of  corporate  entitlements,  80. 


Educational  purposes. 

Corporations  organized  for,  excepted  from  taxation,  79. 


100  INDEX  TO  PART  I. 

Election  of  trustees. 

Lapse  of,  30. 

Eminent  domain, 

Corporate  property  liable  to  by  the  state,  10. 
Usual  procedure  by  corporations  in  cases  of,  65. 

Entitlements. 

Duplication  of  corporate,  prohibited,  80. 

Exchange  of  messages  by  telegraph  and  telephone  companies, 
19. 

Excursion  tickets,  15. 

Executor. 

Collateral  stock,  may  vote,  39. 
Fiduciary,  may  vote  stock  held  as,  35. 

Express  companies. 
Rights  on  railroads,  21. 


False  entry. 

Misdemeanor  for  clerk  or  officer  of  corporation  to  make,  41. 
Penalty  for  clerk  or  officer  of  corporation  to  make,  41. 

Fees. 

Certified  copies,  for  furnishing,  76. 

Corporate  articles,  74. 

License,  78. 

Recording  articles  of  foreign  corporation,  60. 

Recording  supplemental  articles,  75. 

Recording  articles,  77 

Fiduciaries. 

May  vote  stock,  35. 


INDEX  TO  PART  I. 

Filing  articles,  24. 
Folio  charge,  77. 
Foreclosure  of  lien,  71. 

Foreign  corporation. 

Cannot  do  business  on  more  favorable  conditions  than  do- 
mestic corporations,  7,  53. 

Conditions  precedent  to  right  to  do  business,  53. 
Penalty  clause  act  1899,  p.  100,  56. 
Recording  fees  for,  60. 

Forfeiture  of  any  franchise  or  charter. 

Shall  not  be  remitted,  3. 

Forfeiture  of  corporate  rights,  court  may  appoint  receiver 
on,  100. 

Formation  of  corporations. 
Generally,  23. 

Franchise. 

Alienation  of,  burdens  follow  on,  8. 
Forfeiture  of,  shall  not  be  remitted,  3. 
Legislature  shall  not  extend  any,  3. 

Fraternal  societies. 

Corporation  organized  for,  exempted  from  taxation,  79. 

Freight. 

Carriers  shall  connect  and  exchange  passengers  and,  13. 

Funds. 

On  dissolution,  held  in  trust  for  creditors,  45. 


General  laws. 

Corporations  must  be  formed  under,  1. 


102  INDEX  TO  PART  I. 

Guardian. 

Not  liable  for  stock  held  as  collateral,  39. 
Person  holding  stock  as,  may  vote,  35. 


I 

Indebtedness. 

Fictitious,  shall  be  void,  6. 

Inspection  of  record  of  stockholders,  40. 

Insolvency,  court  may  appoint  receiver  in  cases  of,  100. 

Instruments. 

Acknowledgment  of  corporate,  82. 

J 

Joint-stock  companies,  5. 


Laborer's  lien. 

On  property  of  corporation,  68. 

Lapse  of  election. 
Of  trustee,  30. 

Laws  relating  to  corporations. 
May  be  altered,  amended  or  repealed,  1. 

Lease  of  franchise,  8. 

Legislative  control. 

Common  carriers  subject  to,  13. 


INDEX  TO  PART  I.  103 

Legislature. 
Passes  to  members  of,  prohibited,  20. 

License  fee,  78. 

Lien. 

Foreclosure  of,  71. 

Laborer's,  on  property  of  corporation,  68. 
Notice  of  claim,  69. 
Tax  on  shares,  a,  86. 

Limitation  of  existence  of  corporation,  24. 
Limitations  of  issuance  of  stock  and  bonds,  6. 

List  of  corporate  property. 

Agent  to  make,  84. 

M 

Mining  corporations. 

Subscriptions  to  stock  of,  49. 

Messages. 

Telephone  and  telegraph  companies  shall  exchange,  19. 

Money. 

Corporations  shall  not  issue,  11. 

Monopolies  and  trusts. 
Prohibition  of,  22. 

Municipality. 

Consent  of,  must  be  obtained  by  water  company,  52. 

N 

Negotiable  paper. 
Power  to  issue,  38. 


104  INDEX  TO  PART  I. 

Notice. 

Banking  or  trust  company  must  give,  for  increase  or  de- 
crease of  stock,  42. 
Claim  of  lien,  must  give  for,  69. 
Corporation  removing  office,  must  give,  47. 
Dissolution  of  corporation,  must  give  on,  46. 
First  meeting  of  trustees,  32. 
Increase  or  decrease  of  capital  stock,  6,  43. 
Trustees  expulsion  of,  29. 

o 

Office. 
Removal  of,  47. 

Officers. 

List  of,  to  be  filed,  25. 


Passengers  and  freight. 
Carriers  of,  13. 

Passes. 
Prohibition  of,  20. 

Payment. 

Lien  claims  by  receiver,  72.  . . 

Subscriptions,  34. 

Tax  by  corporation,  85. 

Penalty. 

Annual  tax,  failure  to  pay,  78. 

Failure  of  foreign  corporations  to  comply  with  law,  56. 

Tax  list,  person  failing  to  give,  73. 


INDEX  TO  PART  I.  105 

Pledged  stock. 
May  be  voted,  36. 

Pooling. 
Prohibition  of,  14. 

Powers  of  corporations. 

How  exercised,  29. 

Privileges,  special  or  exclusive. 

Not  valid  unless  acted  upon  at  the  time  of  the  adoption  of 
constitution,  2. 

Profits. 

Dividends  only  from,  37. 

Property  of  corporation. 

Agent  of  corporation  to  make  list  of  for  purposes  of  taxa- 
tion, 84. 

Public  use. 

Corporate  property  liable  to  eminent  domain  by  state  for,  10. 

Q 

Quorum. 
Board  of  trustees,  31. 

R 

Railroad. 

Combination  of  companies  prohibited,  14. 
Commission,  18. 

Competing,  shall  not  consolidate,  16. 
Express  companies,  rights  on,  21. 
Rates,  18. 


106  INDEX  TO  PART  I. 

Receiver. 

Court  may  appoint,  100. 

Payment  by,  72. 

Service  of  summons  on,  89. 

Record  of  stockholders. 

Inspection  of,  stockholders  have  right  of,  40. 
Trustees  must  keep,  40. 

Record  papers. 

Foreign  corporations  must  file  and,  54. 

Reduction  of  stock,  37. 

Religious  purposes. 

Corporations  organized  for,  excepted  from  fees,  79. 

Removal  of  office,  47. 

Resident  agent. 

Foreign  corporation  must  appoint,  55. 

Rolling  stock. 
Is  personalty,  17. 


Seal. 

Corporation  may  make  and  use,  28. 

Secretary  of  state. 

Certificate  of,  as  to  articles  of  incorporation,  prima  facie 

evidence,  27. 
Fees  of,  76,  77. 

Service  of  process. 

Corporation  may  be  sued  where  person  resides  upon  whom 
service  may  be  made,  99. 

Corporation  may  be  sued  where  it  has  an  office  for  busi- 
ness, 99. 

Defunct  domestic  corporation,  on,  90. 


INDEX  TO  PART  I. 

Foreign  corporation,  how  may  be  made  on,  55,  91. 
Receiver  of  corporation,  when  may  be  made  on,  89. 

Service  of  lien  notice  same  as  in  summons,  70. 

Short  haul. 

Not  greater  charge  than  longer  haul,  15. 

Social  purposes. 

Corporations  organized  for,  exempt  from  taxation,  79. 

Special  acts. 

Corporations  shall  not  be  created  by,  1. 

State  auditors. 

County  auditors  to  make  report  of  corporations  to,  59. 
Banks  must  report  to,  38. 

State. 

Corporate  property  liable  to  eminent  domain  by,  10. 
Credit,  shall  not  loan,  9. 

Statutory  provisions. 

Failure  of  foreign  corporation  to  comply  with,  56. 

Stock. 

Capital,  change  of,  6. 

Fiduciary  may  vote,  35. 

Holder  of,  as  collateral,  not  liable,  39. 

Increase  or  decrease  of  capital,  42. 

Increase  of,  how  may  be  effected,  6. 

Limitations  on  issuance  of,  6. 

Mining  corporations,  subscriptions  for,  49. 

Pledged,  may  be  voted,  36. 

Subscribed  before  commencing  business,  23. 

Tax,  how  to  be  paid  on  corporate,  83. 

Tax  on,  payment  of  by  corporation,  85. 


108  INDEX  TO  PAHT  I. 

Stockholders. 
Liability  of,  38. 

Meeting  of,  to  increase  or  decrease  stock,  43. 
Protection  of,  from  fraudulent  representations,  81. 
Record  of,  40. 
Voting  by,  29. 

Subscriptions. 

Bank,  payment,  34. 
Mining  corporation,  49. 

Supplemental  articles. 
Fee  for  filing,  75. 

Survey,  preliminary. 
In  eminent  domain,  64. 


Tax. 

Annual,  penalty  for  neglect  to  pay,  78. 
Corporate  stock,  how  tax  to  be  paid  on,  78. 

Foreclosure  on,  for,  86. 

Payment  by  bank,  lien  on  share  of,  86. 

Payment  by  corporation,  85. 

Telegraph  companies. 
Construction  of  lines,  19. 
Eminent  domain,  19. 
Exchange  of  messages,  19. 

Tickets. 

Commutation,  15. 

Titles. 
Prevention  of  duplication  of,  80. 


INDEX  TO  PART  I. 

Town. 

Consent  must  be  secured  by  water  companies,  52. 
Transfer  of  stock,  33. 

Transportation  commission. 
May  be  established  by  state,  18. 

Trustees  of  corporation. 

Corporate  powers  exercised  by,  29. 

Election,  lapse  of,  30. 

Expulsion  of,  32. 

Expulsion,  notice  necessary  before,  29. 

First  meeting  of,  32. 

Names  of,  24. 

Notice  necessary  to  expel,  29. 

Number  of,  13,  29. 

Oath,  must  take,  29. 

Quorum  of,  31. 

Service  of  process  on,  29. 

Stock,  when  liable  for  reduction  of,  37. 

Stockholder,  must  be,  29. 

Time  for  which  first  serve,  24. 

Vacancy,  how  filled,  29. 

Trusts  prohibited,  monopolies  and,  22. 


Vote. 

Increase  or  decrease  of  capital  stock,  by,  43. 
Stockholders'  meeting,  29. 


INDEX  TO  PART  I. 


Water  companies. 

Consent  of  town  prerequisite,  52. 
Preliminary  survey  for,  64. 


PART  II. 
THE  LAW  OF  PRIVATE  CORPORATIONS. 


CHAPTER  I. 
OBJECTS  AND  ADVANTAGES  OF  INCORPORATION. 

Objects  and  advantages  of  incorporation. 

§  101.  To  obtain  capital. 

102.  To  obtain  unity  of  action. 

103.  To  avoid  casualty. 

104.  To  avoid  liability. 

105.  To  expedite  business. 

To  obtain  capital. 

§  101.  The  large  capital  required  for  modern  busi- 
ness enterprises  demands  co-operation  on  the  part  of  the 
owners  of  capital.  Corporations,  as  we  have  them,  are  a 
result  of  what  has  proved  to  be  the  most  satisfactory 
method  of  obtaining  this  co-operation. 

To  obtain  unity  of  action. 

§  102.  Without  incorporation,  unity  of  action  is  im- 
possible where  many  individuals  are  concerned.  In  a 
corporation,  a  fixed  number,  usually  a  majority,  rules. 

To  avoid  casualty. 

§  103.  If  a  number  of  persons  are  associated  in  an 
enterprise,  the  death,  withdrawal,  or  insolvency  of  one 
of 'them,  or  other  contingencies,  may  defeat  the  object 
of  the  association.  Under  incorporation,  this  interfer- 
ence is  avoided. 

8  D 


OBJECTS   AND   ADVANTAGES   OP  INCORPORATION. 

To  avoid  liability. 

§  104.  An  individual  is  liable  for  the  full  amount  of 
his  debts.  A  partner  is  liable  for  the  full  amount  of  the 
partnership  debts.  A  stockholder  in  a  corporation  is  not 
liable  for  the  debts  of  the  corporation,  except  in  certain 
cases,  and  then  only  for  a  stipulated  amount. 

To  expedite  business. 

§  105.  If  property  is  owned  by  an  association  of  per- 
sons, all  contracts  relating  thereto  must  be  made  as  in- 
dividuals. A  corporation  has  the  title  to  the  corporate 
property  and  can  make  contracts  affecting  it  the  same  as 
a  natural  person. 


CHAPTER  II. 

CREATION  OF  CORPORATIONS. 

§  106.  Power  to  create. 

107.  Method  of  creation. 

108.  Corporate  name. 

109.  Objects  of  incorporation. 

110.  Amount  of  capital  stock  and  number  of  shares. 

111.  Time  of  existence. 

112.  Principal  place  of  business. 

113.  Number  and  names  of  trustees. 

114.  Amendment  of  articles  of  incorporation. 

115.  Effect  of  failure  to  comply  with  statutory  provisions. 

Power  to  create. 

§  106.  The  power  to  create  corporations  is  in  the 
legislature. 

Method  of  creation. 

§  107.  The  state  constitution  provides  that  corpora- 
tions can  only  be  formed  under  general  laws  and  that 
they  shall  not  be  created  by  special  act.1 

Any  two  or  more  persons  may  make  and  subscribe 
written  articles  of  incorporation,  in  triplicate,  and  ac- 
knowledge the  same  before  any  officer  authorized  to  take 
the  acknowledgement  of  deeds,  and  file  one  of  such  arti- 

§  106. 
Sec.  1. 

§  107. 
i  Sec.  1. 


CREATION  OF  CORPORATIONS 

cles  in  the  office  of  the  secretary  of  state,  one  in  the  office 
of  the  county  auditor  in  the  county  in  which  the  principal 
place  of  business  of  the  company  is  located,  and  retain  the 
third  in  the  possession  of  the  corporation.2  When  the 
articles  have  been  filed,  the  persons  who  shall  have  signed 
and  acknowledged  the  same  and  their  successors,  shall  be 
a  body  corporate  and  politic  in  fact  and  in  name.3  The 
mere  use  of  a  corporate  name  without  filing  articles  of 
incorporation  does  not  constitute  a  corporation.4 

Corporate  name. 

§  108.  The  articles  of  incorporation  shall  state  the 
name  of  the  corporation,1  which  shall  not  be  the  same 
name  as  that  of  any  other  corporation  of  this  state  or  of 
any  foreign  corporation  that  has  complied  with  the  laws  of 
this  state,  nor  so  nearly  resembling  the  name  of  such 
other  corporation  as  to  be  misleading.2 

Objects  of  incorporation. 

§  109.  The  articles  of  incorporation  shall  state  the 
objects  for  which  the  corporation  is  formed. 

§  107. 

2  Sec.  24. 

3  Sec.  28. 

<  Bash  v.  Culver  Gold  Mining  Co.,  7  Wash.  122;  34  Pac.  462. 

§  108. 

1  Sec.  24. 

2  Sec.  80. 

§  109. 
Sec.  24. 


CREATION  OF  CORPORATIONS 

Amount  of  capital  stock  and  number  of  shares. 

§  110.  The  articles  of  incorporation  shall  state  the 
amount  of  the  capital  stock  of  the  corporation  and  the 
number  of  shares  into  which  it  is  divided. 


Time  of  existence. 

§  111.  The  articles  of  incorporation  shall  state  the 
number  of  years  for  which  the  corporation  shall  exist, 
which  shall  not  exceed  fifty  years. 

Principal  place  of  business. 

§  112.  The  articles  of  incorporation  shall  state  the 
name  of  the  city,  tpwn  or  locality,  and  county,  in  which 
the  principal  place  of  business  of  the  corporation  shall  be 
located. 

Number  and  names  of  trustees  and  time  for  which  first  trus- 
tees shall  serve. 

§  113.  The  articles  of  incorporation  shall  state  the 
number  of  the  trustees  and  the  names  of  the  first  trustees 
and  the  time  for  which  these  trustees  shall  serve  which 
shall  not  be  less  than  two  months  and  shall  not  exceed 
six  months. 

Amendments  to  articles  of  incorporation. 

§  114.  Amendments  may  be  made  to  the  articles  of 
incorporation,  by  supplemental  articles,  executed  and  filed 
the  same  as  the  original  articles. 

§  110-111-112-113-114. 
Sec.  24. 


CREATION  OF  CORPORATIONS 


Effect  of  failure  to  comply  with  statutory  provisions. 

§  115.  Unless  the  statute  is  complied  with  in  forming 
a  corporation,  it  is  open  to  attack  by  the  state,  and  the 
persons  attempting  to  exercise  corporate  powers  can  be 
ousted  from  the  exercise  of  these  powers  by  the  state.1 
Objection  to  the  legality  of  the  corporation,  however,  can- 
not be  raised"  by  the  corporation  itself  or  by  one  dealing 
with  it  to  the  loss  or  injury  of  other  parties.2  Whether 
a  corporation  is  one  de  jure  or  merely  de  facto,  it  is  en- 
titled to  the  possession  of  its  property  until  deprived 
thereof  by  a  court  of  competent  jurisdiction.3  When  an 
action  has  been  brought  by  the  state  to  oust  a  corporation 
of  its  powers,  the  court  may  appoint  a  receiver  to  take 
charge  of  the  property  of  the  corporation  after  judgment 
against  it,4  but  not  upon  the  institution  of  the  suit.5 

§  115. 

1  Sees.  92  and  94. 

2  Carroll  v.  Pacific  National  Bank,  19  Wash.  639;  54  Pac.  32. 

3  State  ex  rel.  Amsterdamsch  Trustees  Kantoor  v.  Superior  Court,  15 
Wash.  68;  47  Pac.  31,  55  Am.  St.  Rep.  907,  37  L.  R.  A.  111. 

4  Sec.  95. 

s  Same  citation  as  Note  3. 


CHAPTER  HI. 

PROOF  OF  INCORPORATION. 

§  116.     Domestic  corporations. 
117.     Foreign  corporations. 

Domestic  corporations. 

§  116.  A  copy  of  the  articles  of  incorporation,  certi- 
fied by  the  auditor  of  the  county  in  which  the  articles  are 
filed,  or  his  deputy,  or  by  the  secretary  of  state,  shall  be 
received  in  all  the  courts  as  prima  facie  evidence  of  the 
facts  therein  stated.1  In  the  absence  of  objection,  incor- 
portation  may  be  shown  by  parol  evidence.2  A  corpora- 
tion de  facto  may  be  proved  by  parol  evidence.3  Parol 
evidence,  however,  is  not  the  best  evidence  of  corporate 
existence.4  Incorporation  of  defendant  company  is  ad- 
mitted by  filing  an  answer  as  such.5  A  de  facto  corpora- 
tion may  be  proved  by  showing  a  bona  fide  attempt  to 
comply  with  the  general  laws  under  which  a  corporation 
can  be  formed,  an  apparent  compliance  with  the  require- 
ments of  such  laws,  and  the  exercise  of  corporate  powers, 
and  having  established  proof  of  a  corporation  de  facto, 
its  existence  cannot  be  inquired  into  collaterally,  but  only 
in  a  direct  proceeding  by  the  state. 
§  H6. 

1  Sec.  27,  Spokane  &  Idaho  Lumber  Co.  v.  Loy,  21  Wash.  501 ;  58  Pac. 
672;  60  Pac.  1119. 

2  Stanford  Land  Co.  v.  Steidle,  28  Wash.  72;    68  Pac.  178;   Yakima 
Nat'l  Bank  v.  Knipe,  6  Wash.  348,  33  Pac.  834;  fol.  in  Nat'l  Bank  of 
Commerce  .v  Galland,  14  Wash.  502;   45  Pac.  35;   State  v.  Pittam,  32 
Wash.  137;  72  Pac.  1042. 

3  Stanford  Land  Co.  v.  Steidle,  supra. 

4  Stanford  Land  Co.  v.  Steidle,  supra. 

5  Frost  v.  Ainslie  Lumber  Co.,  3  Wash.  241;  28  Pac.  354;  Sengf elder 
v.  Mutual  Life  Ins.  Co.,  5  Wash.  121;  31  Pac.  428. 


120  PROOF  OF  INCORPORATION 

Foreign  corporations. 

§  117.  A  copy  of  the  articles  of  incorporation  and  the 
appointment  of  an  agent,  certified  by  the  secretary  of 
state  as  being  of  record  in  his  office,  constitute  prima 
facie  evidence  of  the  organization  of  such  corporation 
and  of  its  right  to  transact  business  in  this  state.1  A 
certified  copy  of  the  act  of  the  legislature  of  a  foreign 
state  incorporating  a  company,  and  the  taking  of  an 
assignment  of  a  note  and  mortgage  or  other  user,  is 
sufficient  proof  of  a  foreign  corporation.2 

§  117. 

1  Knapp,  Burrell  &  Co.  v.  Strand,  4  Wash.  CSS;  30  Pac.  1063. 

2  Lancaster  Savings  Bank  v.  Elwell,  17  Wash.  446;  49  Pac.  1070. 

3  See  case  of  Fidelity  Ins.  etc.  Co.  v.  Nelson,  30  Wash.  340;  70  Pac. 

961;  as  to  presumption  regarding  laws  of  a  sister  state. 


CHAPTER  IV. 

POWERS  OF  CORPORATIONS. 

§  118.     To  sue  and  be  sued. 
119.    To  have  a  seal. 

120.  Form  of  seal. 

121.  Use  of  seal. 

122.  By  whom  is  seal  affixed. 

123.  Effect  of  affixing  seal. 

124.  Failure  to  affix  seal. 

125.  To  acquire,  hold  or  alienate  property. 

126.  To  appoint  and  remove  officers  and  agents. 

127.  To  make  'by-laws. 

128.  To  manage  its  business  and  make  regulations. 

129.  To  make  contracts. 

Particular  contracts. 

130.  Contracts  with  strangers. 

131.  Contracts  with  stockholders. 

132.  Contracts  with  officers  and  trustees. 

133.  Contracts  in  violation  of  law. 

134.  Right  to  borrow  money  and  issue  notes  for  author- 

ized purpose. 

135.  Right  to  borrow  money  and  issue  notes  for  unau- 

thorized purpose. 

136.  Right  to  become  guarantors. 

137.  Right  to  subscribe  for  or  purchase  stock  in  other 

corporations. 

138.  Right  to  purchase  its  own  stock. 

139.  Contracts  between  stockholders  prior  to  incorpora- 

tion. 


122  POWERS  OF  CORPORATIONS 

In  general 

140.  Form  of  contract. 

141.  Place  of  contract. 

142.  When  powers  can  be  exercised. 

143.  Where  powers  can  be  exercised. 

144.  Kind  of  business  that  can  be  carried  on. 

To  sue  and  be  sued. 

§  118.  A  corporation  may  sue  or  may  be  sued  in  its 
corporate  name  the  same  as  a  natural  person. 

To  have  a  seal. 

§  119.  A  corporation  may  make  and  use  a  common 
seal  and  alter  the  same  at  its  pleasure. 

Form  of  seal. 

§  120.  Our  statute  does  not  provide  a  form  of  seal, 
and  hence  the  form  of  seal  is  determined  by  the  corpora- 
tion. It  is  the  common  practice  to  place  on  the  seal  the 
name  of  the  corporation,  the  name  of  its  principal  place 
of  business  in  this  state,  and  the  date  of  its  incorporation. 

Use  of  seal. 

§  121.  The  seal  of  the  corporation  is  used  to  authen- 
ticate the  contracts  and  agreements  of  the  corporation, 
and  should  be  affixed  to  its  certificates  of  stock. 

By  whom  is  seal  affixed. 

§  122.  The  seal  must  be  used  or  affixed  by  or  under 
the  direction  of  the  officer  designated  by  the  by-laws  of 
the  corporation,  or  in  some  other  manner,  as  the  person 
to  use  or  affix  it. 

§  118. 

Sec.  28. 

§  119. 
Sec.  28. 


POWERS  OP  CORPORATIONS  123 

Effect  of  affixing  seal. 

§  123.  As  a  general  rule,  the  effect  of  affixing  the  seal 
is  to  afford  strong  evidence  of  the  validity  of  the  docu- 
ment to  which  it  is  affixed. 

Failure  to  affix  seal. 

§  124.  Our  court  in  one  case  refused  to  draw  any  dis- 
tinction between  a  contract  executed  by  an  officer  and  au- 
thenticated by  the  seal  and  one  not  so  authenticated. 

To  acquire,  hold  or  alienate  property. 

§  125.  A  corporation  has  power  to  acquire  such  real 
or  personal  property  as  it  needs  to  carry  on  the  corporate 
business  and  may  •  hold,  mortgage,  sell  or  convey  the 
same.1  A  corporation,  the  majority  of  whose  stock  is 
held  by  aliens,  cannot  acquire  lands  except  under  mort- 
gage or  in  good  faith  in  the  ordinary  course  of  justice  in 
the  collection  of  debts.2  A  corporation  cannot  sell  or 
lease  its  entire  property  when  not  specifically  authorized 
to  do  so  by  its  articles  of  incorporation,3  except  by  a 
unanimous  vote  of  its  stockholders.  A  corporation  can- 
not lease,  mortgage  or  sell  its  franchises  or  property  held 
thereunder,  free  from  the  liabilities  of  the  lessor,  or 
grantee,  contracted  or  incurred  in  the  operation,  use  or 
enjoyment  of  such  franchises  or  any  of  its  privileges.4  A 

§  124. 

Carrigan  v.  Port  Crescent  Improvement  Co.,  6  Wash.  590;  34  Pac.  148. 
§  125. 

1  Sec.  28. 

2  Sec.  96,  Hastings  v.  Anacortes  Packing  Co.,  29  Wash.  224;  69  Pac. 

776. 

s  Parsons  v.  Tacoma  Smelting  Co.,  25  Wash.  492;  65  Pac.  765. 
4  Sec.  8. 


124  POWERS  OF  CORPORATIONS 

corporation  can  sell  or  assign  franchises  granted  to  it  by 
a  city.5 

To  appoint  and  remove  officers  and  agents. 

§  126.  A  corporation  can  appoint  such  officers,  agents 
or  servants  as  the  business  of  the  corporation  shall  re- 
quire, define  their  duties,  prescribe  their  powers,  fix  their 
compensation  and  remove  them,  but  no  trustee  shall  be 
removed  except  upon  a  two-thirds  vote  of  the  stockhold- 
ers.1 The  two-thirds  vote  required  to  remove  a  trustee 
means  a  two-thirds  vote  of  the  stock.2  The  by-laws  of  the 
corporation  should  fix  the  names  of  the  officers  of  the  cor- 
poration, define  their  duties,  fix  their  powers,  and  provide 
for  their  removal.  The  compensation  of  the  officers  and 
agents  of  the  corporation  is  usually  fixed  by  the  board 
of  trustees. 

To  make  by-laws. 

§  127.  A  corporation  has  power  to  make  by-laws,  but 
these  by-laws  must  not  be  unreasonable,  nor  inconsistent 
with  the  articles  of  incorporation,  the  constitution  or  laws 
of  the  United  States,  the  constitution  or  laws  of  this  state. 
Unless  the  articles  of  incorporation  confer  the  power  of 
making  by-laws  upon  the  trustees,  the  stockholders  adopt 
the  by-laws  at  their  stockholders'  meetings.  If  the  arti- 
cles of  incorporation  confer  the  power  of  making  by-laws 
upon  the  board  of  trustees,  the  by-laws  must  be  adopted 

§  125. 

e  Commercial  Electric  Light  &  Power  Co.  v.  Tacoma,  17  Wash.  661;  50 
Pac.  592.     Cited  in  State  ex  rel.  Grinsfelder  v.  Spokane  St.  R.  Co.,  19 
Wash.  532;  53  Pac.  719;  67  Am.  St.  739;  41  L.  R.  A.  515. 
§  126. 

1  Sec.  29. 

2  State  ex  rel.  Mitchell  v.  Horan,  22  Wash.  197;  60  Pac.  135. 


POWERS  OF  CORPORATIONS  125 

by  the  board  of  trustees.    A  by-law  may  be  abrogated  by 
non-usage.1 

To  manage  its  business  and  make  regulations. 

§  128.  A  corporation  must  necessarily  have  the  right 
to  manage  its  business.1  As  the  by-laws  of  a  corporation 
do  not  provide  all  the  necessary  rules  for  the  conduct  of 
the  members  and  officers  of  the  corporation,  the  corpora- 
tion is  empowered  to  make  regulations.2  Regulations 
are  usually  made  to  control  the  conduct  of  the  officers  or 
employes  of  the  corporation  and  are  usually  made  in  some 
informal  manner,  either  by  the  board  of  trustees  or  some 
officer  of  the  corporation. 


To  make  contracts. 

§  129.  Several  of  the  powers  of  a  corporation  set  out 
in  the  statute  give  a  corporation  the  right  to  make  con- 
tracts.1 Owing  to  the  importance  that  attaches  to  the 
right  of  the  corporation  to  make  contracts  and  the  many 
questions  that  arise  in  the  exercise  of  this  right,  we  will 
consider  some  of  these  contracts  both  with  respect  to  the 
persons  entering  into  the  contract,  and  the  kind  or  nature 
of  these  contracts. 

§  127. 

i  Blair  v.  Metropolitan  Savings  Bank,  27  Wash.  192;  67  Pac.  609. 
§  128. 

1  Sec.  28. 

2  Sec.  28. 

§   129. 
Sec.  28. 


126  POWERS  OF  CORPORATIONS 

Particular  contracts. 
Contracts  with  strangers. 

§  130.  Contracts  with  strangers  to  the  corporation 
stand  on  the  same  footing  as  contracts  between  natural 
persons  who  are  strangers  to  each  other.  A  person  who 
has  entered  into  a  contract  with  a  corporation  cannot 
question  the  right  of  the  corporation  to  make  the  con- 
tract.1 The  principal  and  sureties  on  a  bond  for  the  at- 
tachment of  the  property  of  a  corporation  are  estopped 
to  deny  its  corporate  existence.2  Although  a  contract  of 
a  corporation  may  not  have  been  properly  authorized  by 
its  board  of  trustees,  yet  when  the  corporation  continues 
to  receive  the  benefits  accruing  from  the  contract,  it  is 
estopped  to  deny  the  validity  of  the  contract.3  When 
all  of  the  stockholders  of  a  corporation  acquiesce  in  the 
execution  of  a  mortgage  on  the  corporate  property  they 
are  estopped  from  setting  up  the  invalidity  of  the  mort- 
gage on  the  ground  that  it  was  executed  without  corpor- 
ate authority.4  Acts  of  a  president  and  secretary  of  a 
corporation  long  acquisced  in  by  the  corporation  bind 
the  corporation.5  A  corporation  is  not  entitled  to  a  dis- 
count on  a  note,  when  the  discount  was  obtained  through 
one  of  its  stockholders  and  trustees,  who  was  also  the 
attorney  of  the  maker  of  the  note.6 

§  130. 

1  Hall  &  Paulson  Furniture  Co.  v.  Wilbur,  4  Wash.  644 ;  30  Pac.  665. 

2  Seattle  Crockery  Co.  v.  Haley  et  al,  6  Wash.  302;  33  Pac.  650;  36 
Am.  St.  156. 

s  Leslie  v.  Wilshire,  6  Wash.  282;  33  Pac.  505. 

*  Roy  &  Co.  v.  Scott,  Hartley  &  Co.,  11  Wash.  399;  39  Pac.  679. 

5  Miller  v.  Washington  Southern  Ry.  Co.,  11  Wash.  414;  39  Pac.  673. 

6  See  case  of  Security  Savings  Soc.  v.  Cohalan,  31  Wash.  266;  71  Pac. 

1020. 


POWERS  OF  CORPORATIONS  127 

Contracts  with  stockholders. 

§  131.  A  corporation  and  its  stockholders  are  sepa- 
rate persons  in  the  eyes  of  the  law,  hence  a  corporation 
can  enter  into  a  contract  with  its  stockholders.  A  stock- 
holder who  deals  with  an  agent  of  the  company  is  pre- 
sumed to  know  the  scope  of  the  agent's  authority.1  An 
agreement  by  a  corporation  that  it  will  not  engage  in  a 
certain  business  within  a  stipulated  period  of  time  does 
not  bind  the  individual  members  of  the  corporation.2 

Contracts  with  officers  and  trustees. 

§  132.  A  corporation  can  enter  into  a  valid  contract 
with  its  officers  or  trustees,1  but  as  an  officer  or  trustee 
of  a  corporation  bears  a  trust  relation  to  the  corporation, 
he  will  not  be  allowed  to  take  advantage  of  the  corpora- 
tion;2 and  if  the  vote  of  a  trustee  interested  adversely 
to  the  corporation  is  necessary  to  make  the  contract,  it 
can  be  set  aside  upon  the  complaint  of  a  stockholder.3 
The  trust  relation  of  officers  and  directors  extends  only 
to  the  corporate  business  and  property  of  the  company, 
and  not  to  private  dealings  with  the  stockholders.4 

Contracts  in  violation  of  law. 

§  133.  A  corporation  cannot  make  a  contract  in  viola- 
tion of  law. 

§  131. 

lHardin  v.  Sweeney,  14  Wash.  129;  44  Pac.  138. 
2  Murray  v.  Okanogan  Live  Stock  etc.  Co.,  12  Wash.  259;  40  Pac.  942. 
§  132. 

i  Budd  v.  Walla  Walla  P.  &  P.  Co.,  2  Wash.  T.  347;  7  Pac.  896. 
2- Parsons  v.  Tacoma  Smelting  Co.,  25  Wash.  492;  65  Pac.  765. 
s  Parsons  v.  Tacoma  Smelting  Co.,  supra;  Budd  v.  Walla  Walla  P.  & 

P.  Co.,  supra. 
4  O'Neile  v.  Ternes,  32  Wash.  528;  73  Pac.  692. 


128  POWERS  OF  CORPORATIONS 

Particular  contracts. 

Right  to  borrow  money  and  issue  notes  for  authorized  purpose. 

§  134.  A  corporation  can  borrow  money  for  its  author- 
ized purposes  and  give  its  note  as  evidence  therefor  and 
may  secure  the  same  by  mortgage  upon  the  corporate 
property.1 

Right  to  borrow  money  and  issue  notes  for  unauthorized 
purpose. 

§  135.  A  corporation  cannot  borrow  money  for  pur- 
poses not  authorized  by  its  articles  of  incorporation,  and 
notes  given  as  evidence  of  an  indebtedness  created  for 
such  unauthorized  purpose,  and  mortgages  to  secure  the 
same,  are  not  valid  as  against  a  non-consenting  stock- 
holder or  a  creditor  of  the  corporation.1  A  note  of  a 
corporation  given  without  consideration  is  valid  in  the 
hands  of  a  bona  fide  purchaser.2 

Right  to  become  guarantors. 

§  136.  A  corporation  may  become  a  guarantor  or 
surety  in  aid  of  its  authorized  purposes,  and  when  it  is 
to  receive  a  direct  and  substantial  benefit  by  so  doing,1 
but  otherwise  it  cannot  enter  into  a  contract  of  guaranty 
or  suretyship  to  the  injury  of  its  creditors.2 
§  134. 

i  Washington  Mill  Co.  v.  Sprague  Lumber  Co.,  19  Wash.  165;  52  Pac. 
1067. 
§  135. 

1  Washington  Mill  Co.  v.  Sprague  Lumber  Co.,  19  Wash.  165;  52  Pac. 
1067. 

2  Stewart  v.  Gould,  8  Wash.  367;  36  Pac.  277. 
§  136. 

1  Wheeler,  Osgood  &  Co.  v.  Everett  Land  Co.,  14  Wash.  630;  45  Pac. 
316. 

2  Washington  Mill  Co.  v.  Sprague  Lumber  Co.,  19  Wash.  165;  19  Pac. 
1067. 


POWERS  OF  CORPORATIONS  129 

Eight  to  subscribe  for  or  purchase  stock  in  other  corporations. 

§  137.  A  corporation  cannot  subscribe  for1  or  pur- 
chase2 stock  in  another  corporation,  and  expressing  such 
power  in  its  articles  of  incorporation  will  not  give  it  the 
right  to  do  so,3  but  it  may  take  stock  of  another  corpora- 
tion as  collateral  to  or  in  payment  of  a  debt  to  the  cor- 
poration. It  has  been  held  that  a  New  Jersey,  corpora- 
tion can  own  stock  in  a  Washington  corporation.4  For 
the  purpose  of  upholding  a  contract,  a  foreign  corpora- 
tion will  be  presumed  to  have  power  to  purchase  its  own 
stock.5 

Eight  to  purchase  its  own  stock. 

§  138.  A  corporation  cannot  purchase  its  own  stock,1 
but  it  can  take  its  own  stock  as  collateral  to  or  in  pay- 
ment of  a  debt  from  its  stockholders,  when  the  transac- 
tion is  bona  fide  and  for  the  purpose  of  protecting  the 
corporation  from  loss.2 

Contracts  between  stockholders  prior  to  incorporation. 

§  139.  A  corporation  is  not  liable  upon  contracts 
prior  to  incorporation  when  there  is  no  corporate  act 
recognizing  such  liability.1 

§  137.- 

1  Denny  Hotel  Co.  v.  Schram,  6  Wash.  134;  32  Pac.  1002;  36  Am.  St. 

130. 

2  Parsons  v.  Tacoma  Smelting  Co.,  25  Wash.  492;  65  Pac.  765. 

3  Parsons  v.  Tacoma  Smelting  Co.,  supra. 

<  Coler  v.  Tacoma  R.  &  P.  Co.,  53  Atl.  686. 
5  Yeaton  v.  Eagle  Oil  &  R.  Co.,  4  Wash,  183;  29  Pac.  1051. 
§  138. 

1  Barton  v.  Nix,  15  Wash.  563;  46  Pac.  1033;  Tait  v.  Pigott,  32  Wash. 
•     345. 

2  Barto  v.  Nix,  supra. 
§  139. 

Bash  v.  Culver  Gold  Mining  Co.,  7  Wash.  122;  34  Pac.  462. 
9  o 


|30  POWERS  OF  CORPORATIONS 

In  general. 

Form  of  contract. 

§  140.  Our  statute  does  not  prescribe  any  form  for 
the  contracts  of  a  corporation,  hence  its  contracts  should 
be  executed  with  the  same  formalities  as  the  contracts  of 
a  natural  person.  The  law,  however,  provides  a  form 
of  acknowledgement  for  the  use  of  corporations  in  cases 
where  an  acknowledgement  is  necessary.1  The  acknowl- 
edgement of  an  instrument  made  to  a  corporation  can  be 
made  before  a  notary  who  is  an  officer  of  the  corpora- 
tion.2 

Place  of  contract. 

§  141.  A  corporation  can  contract  either  within  or 
without  the  state  so  long  as  it  conforms  to  the  laws  of  the 
state  where  such  contract  is  made. 

When  powers  can  be  exercised. 

§  142.  A  corporation  can  commence  business  when 
the  whole  amount  of  its  capital  stock  has  been  subscribed, 
provided,  however,  that  corporations  engaged  exclusively 
in  loaning  money  on  real  estate  or  in  raising  money  from, 
and  loaning  or  repaying  it  to  their  own  members,  and 
which  confine  their  loaning  or  business  operations  wholly 
to  the  counties  of  their  principal  place  of  business,  re- 
spectively, and  to  the  counties  adjacent  and  adjoining 
thereto,  need  not  have  any  definite  amount  of  their  capi- 

§  140. 

1  Sec.  82. 

2  Keene  Guaranty  Savings  Bank  v.  Lawrence,  32  Wash.  572 ;  73  Pac. 
680;  Spokane  &  Idaho  Lumber  Co.  v.  Loy,  21  Wash.  501;  58  Pac.  672; 
Nixon  v.  Post,  13  Wash.  181;  43  Pac.  23. 

s  See  case  of  Fox  v.  Burlington  Mnfg.  Co.,  7  Wash.  391;  35  Pac.  126; 
for  effect  of  a  contract  of  lease  signed  by  all  stockholders  of  a  corpora- 
tion. 


POWERS  OF  CORPORATIONS 

tal  subscribed,1  and  the  mere  fact  that  a  corporation  has 
power  to  do  other  acts  than  the  ones  mentioned  in  this 
proviso  will  not  deprive  it  of  the  right  to  do  business  be- 
fore the  whole  of  its  capital  is  subscribed,  if  it  does  in 
fact  confine  its  business  within  the  terms  of  this  pro- 
viso.2 A  banking  corporation,  however,  cannot  begin 
business  until  three-fifths  of  its  capital  stock  has  been 
paid  in,3  and  the  entire  stock  of  a  trust  company  must 
be  paid  in  before  it  can  be  authorized  to  transact  busi- 
ness.4 Although  a  corporation  may  not  have  complied 
with  the  statutory  requirement  that  all  of  its  stock  must 
have  been  subscribed  before  it  can  do  business  as  a  cor- 
poration, yet  where  it  has  done  business  without  fully 
and  fairly  complying  with  such  prescription,  the  ques- 
tion cannot  be  raised,  either  by  the  corporation,  or  one 
dealing  with  it,  to  the  injury  or  loss  of  other  parties.5 


Where  powers  can  be  exercised — Place  of  business — Removal. 

§  143.  A  corporation  can  exercise  its  powers  at  any 
place  within  the  state,  and  at  any  place  without  the  state, 
by  conforming  to  the  laws  of  the  place  where  it  attempts 
to  do  business. 

The  articles  of  incorporation  fix  the  principal  place  of 
business  of  the  corporation.1  If  a  corporation  moves  its 

§  142. 

1  Sec.  23. 

2  Brown  v.  Blwell,  17  Wash.  442;  49  Pac.  1068. 

3  Sec.  34. 

4  Laws  1903,  p.  367. 

5  Spokane  v.  Amsterdamsch  Trustees  Kantoor,  22  Wash.  172;  60  Pac. 
141. 

§  143. 
i  Sec.  28. 


132  POWERS  OF  CORPORATIONS 

principal  place  of  business  into  some  other  county  in  the 
state,  it  must  file  a  certified  copy  of  its  certificate  of  in- 
corporation in  the  office  of  the  county  auditor  of  the 
county  to  which  its  place  of  business  is  removed.2  If 
a  corporation  removes  its  principal  place  of  business  to 
some  other  city,  town  or  locality  within  the  same  county, 
it  must  publish  a  notice  of  such  removal  for  at  least  four 
weeks  in  the  newspaper  published  nearest  to  the  city, 
town  or  locality  from  which  it  removes  its  principal  place 
of  business.3 

Kind  of  business  that  can  be  carried  on. 

§  144.  A  corporation  must  confine  its  business  within 
the  objects  set  out  in  its  articles  of  incorporation.1  A 
corporation,  however,  can  do  such  acts  as  are  incidental 
to  and  in  aid  of  its  principal  business  as  set  out  in  its 
articles  of  incorporation.2 

§  143. 

2  Sec.  47. 

3  Sec.  47. 
§  144. 

1  Parsons  v.  Tacoma  Smelting  Co.,  25  Wash.  492 ;  65  Pac.  765. 

2  Wheeler,  Osgood  &  Co.  v.  Everett  Land  Co.,  14  Wash.  630;  45  Pac. 
316. 


CHAPTER  V. 

ULTRA  VIRES. 

§  145.     Definition  of  ultra  vires. 
146.     Reason  for  rule  of  ultra  vires. 

Rights  of  persons  affected  by  an  ultra  vires  act. 

§  147.  Rights  of  the  state. 

148.  Rights  of  the  corporation  itself. 

149.  Rights  of  stockholders  and  creditors. 

150.  Rights  of  strangers  dealing  with  the  corporation. 

Definition  of  ultra  vires. 

§  145.  When  a  corporation  does  an  act,  not  within 
the  scope  of  its  powers  as  set  forth  in  the  articles  of  in- 
corporation, or  contrary  to  law,  it  is  called  an  ultra 
vires  act.  Many  acts  called  ultra  vires,  such  for  example, 
as  acts  in  excess  of  their  authority  by  officers  of  a  cor- 
poration, are  not  ultra  vires,  and  should  properly  be 
treated  under  some  other  subject.  Just  as  in  the  case 
of  individuals,  a  corporation  may  do  wrong  or  may  do 
an  ultra  vires  act,  and  rights  and  liabilities  may  grow 
out  of  this  act. 

Reason  for  the  doctrine  of  ultra  vires. 

§  146.  The  reason  for  the  doctrine  of  ultra  vires  is 
found  in  the  interest  the  state  has  in  seeing  that  the 
corporation,  like  any  other  person,  does  not  exceed  its 
powers  or  do  wrong,  and  the  interest  of  the  stockholders 


134  ULTRA  VIRES 

and  creditors  of  the  corporation,  or  persons  dealing  with 
the  corporation,  in  seeing  that  the  capital  of  the  corpora- 
tion is  not  subjected  to  the  risk  of  enterprises  other  than 
those  contemplated  by  its  articles  or  allowed  by  law. 

Rights  of  persons  affected  by  an  ultra  vires  act. 

Rights  of  the  state. 

§  147.  A  corporation  forfeits  its  rights  by  an  ultra 
vires  act,  and  the  state  can  proceed  against  it  by  quo 
warranto  to  forfeit  its  charter  or  oust  it  from  the  exer- 
cise of  the  ultra  vires  act.1 

Rights  of  the  corporation  itself. 

§  148.  The  courts  will  not  interfere  with  an  ultra 
vires  contract  that  is  fully  executed.  If  the  ultra  vires 
contract  is  fully  executory,  it  is  void.  If  the  corporation 
has  received  and  retained  the  benefits  of  an  ultra  vires 
act,  it  cannot  set  up  the  plea  that  the  contract  is  ultra 
vires.1  When  a  bank,  through  its  officers,  has  induced  a 
person  to  enter  into  an  agreement  for  the  purpose  of  de- 
frauding him,  it  cannot  avoid  liability  oh  the  ground 
that  the  contract  was  ultra  vires.2 

§  147. 

i  Sec.  94. 

§  148. 

1  Tootle  v.  First  National  Bank,  6  Wash.  181;  33  Pac.  345;  cited  in 
Miller  v.  Washington  So.  R.  Co.,  11  Wash.  414;   39  Pac.  673;  Allen  v. 
Olympia  L.  &  P.  Co.,  13  Wash.  307;  43  Pac.  55;  Wheeler,  Osgood  &  Co. 
v.  Everett  Land  Co.,  14  Wash.  630;   45  Pac.  316;   Spokane  v.  Amster- 
damsch  Trustees  etc.,  22  Wash.  172;    60  Pac.  141;   Graton  &  Knight 
Co.  v.  Redelsheimer,  28  Wash.  370,  68  Pac.  879. 

2  Pranger  v.  Old  Nat'l  Bank,  20  Wash.  618;  56  Pac.  391. 


ULTRA  VIRES  135 

Rights  of  stockholders  and  creditors. 

§  149.  A  stockholder  or  creditor  has  a  right  to  insist 
that  the  capital  of  the  corporation  shall  not  be  diverted 
to  purposes  outside  the  powers  of  the  corporation,  as 
denned  by  law  and  set  out  in  the  articles  of  incorporation.1 
An  ultra  vires,  executory  contract  is  voidable  at  the  suit 
of  a  non-consenting  stockholder.  A  stockholder  may  re- 
strain other  stockholders  or  the  corporation  from  doing 
utra  vires  acts.  In  order  for  a  stockholder  to  obtain  re- 
lief against  an  ultra  vires  act,  he  must  act  promptly,  or 
he  will  be  presumed  to  have  acquiesced  in  the  transaction. 

Rights  of  strangers  dealing  with  the  corporation. 

§  150.  A  person  who  deals  with  a  corporation  must 
take  notice  of  its  powers,  but,  if  the  fact  that  an  act  is 
ultra  vires  was  not  known  by  the  person  dealing  with  the 
corporation,  and  the  facts  making  it  ultra  vires  were 
peculiarly  within  the  knowledge  of  the  corporation,  the 
corporation  will  be  estopped  to  deny  its  authority  to  make 
the  contract.  If  the  corporation  repudiates  an  ultra 
vires  contract,  it  must  restore  any  money  or  property 
received  under  it. 

§  149. 

i  Parsons  v.  Tacoma  Smelting  Co.,  25  Wash.  492;  65  Pac.  765;  see 
case  of  Blair  v.  Metropolitan  Savings  Bank,  27  Wash.  192;  67  Pac.  609. 


CHAPTER  VI. 

CAPITAL  STOCK. 
Subscriptions  to  capital  stock. 

§  151.  Who  can  subscribe  for  stock. 

152.  Who  can  receive  stock  subscriptions. 

153.  Form  of  stock  subscriptions. 

154.  Consideration  for  stock  subscriptions. 

155.  Conditional  subscriptions  for  stock. 

156.  Payment  of  stock  subscriptions. 

157.  When  stock  subscriptions  can  be  enforced. 

158.  Manner  of  enforcing  stock  subscriptions. 

In  general. 

159.  Amount  of  capital  stock. 

160.  Number  and  face  value  of  shares  of  capital  stock. 

161.  Increase  or  decrease  of  capital  stock. 

162.  The  capital  stock  is  a  trust  fund. 

163.  Overissued  stock. 

Who  can  subscribe  for  stock. 

§  151.  Any  person  capable  of  making  a  contract  can 
subscribe  for  stock  in  a  corporation.  A  corporation,  how- 
ever, cannot  subscribe  for  its  own  stock,  and  a  Washing- 
ton corporation  cannot  subscribe  for  stock  in  another 
corporation.1 

i  Denny  Hotel  Co.  v.  Schram,  6  Wash.  134;  32  Pac.  1002,  36  Am.  St. 
130;  followed  in  Denny  Hotel  Co.  v.  Gilmore,  6  Wash.  152;  32  Pac. 
1004.  Cited  in  Parsons  v.  Tacoma  Smelting  Co.,  25  Wash.  492;  65  Pac. 
765;  Knowles  v.  Sandercock,  107  Cal.  643;  40  Pac.  1049;  Nebraska  Shirt 
Co.  v.  Horton  (Neb.),  93  N.  W.  225. 


CAPITAL  STOCK 

Who  can  receive  subscriptions. 

§  152.  The  corporation  can  authorize  any  person  to 
receive  subscriptions.  Subscriptions  received  by  persons 
not  authorized  to  receive  them  will  not  be  binding  on  the 
corporation  unless  subsequently  accepted  or  ratified  by 
the  corporation. 

Form  of  stock  subscriptions. 

§  153.  Subscriptions  for  stock  may  be  in  any  form, 
if  they  show  the  intention  of  the  parties  to  subscribe. 
They  need  not  be  in  writing.  Even  if  there  has  been  no 
formal  subscription  of  any  kind  for  the  stock  of  a  cor- 
poration it  may  be  legally  formed,  and  a  person  dealing 
with  it  cannot  avoid  his  contract  on  that  ground.1  A 
joint  subscription  by  trustees  of  a  corporation  for  the 
purpose  of  completing  the  subscriptions  to  the  capital 
stock  is  an  enforceable  contract.2 

Consideration  for  stock  subscriptions. 

§  154.  The  consideration  for  a  subscription  to  stock 
in  a  corporation  is  the  benefit  to  be  derived  from  being 
a  stockholder  in  the  corporation.  Notes,  given  in  pay- 
ment of  subscriptions  to  the  capital  stock  of  a  corpora- 
tion, are  based  upon  a  valid  consideration,  when  the  sub- 
scriptions are  legally  enforceable.1 

§  153. 

i  Carroll  v.  Pacific  Nat'l  Bank,  19  Wash.  639;  54  Pac.  32;  followed  in 
Spokane  v.  Amsterdamsch  Trustees  Kantoor,  22  Wash.  172;  60  Pac.  141. 

'2  Hardin  v.  Mullin,  16  Wash.  647;  48  Pac.  349. 

§  154. 
i  Hardin  v.  Sweeney,  14  Wash.  129;  44  Pac.  138. 


138  CAPITAL  STOCK 

Conditional  subscriptions  for  stock. 

§  155.  Conditional  subscriptions  to  the  stock  of  cor- 
porations may  be  made,  and  payment  therefor  depend 
upon  the  performance  of  the  conditions,  but  this  can  be 
done  only  at  the  time  of  the  organization  of  the  com- 
pany and  before  such  organization  has  been  completed.1 

Payment  of  stock  subscriptions. 

§  156.  Stock  may  be  paid  for  in  money  or  in  prop- 
erty.1 Stock  is  frequently  paid  for  in  property  taken 
at  an  overvaluation,  and  upon  the  failure  of  the  corpora- 
tion, the  creditors  attempt  to  recover  from  the  stock- 
holder the  difference  between  the  actual  value  of  the 
property  and  the  face  value  of  the  stock.  The  decisions 
of  our  supreme  court  in  these  cases  do  not  seem  to  be 
very  harmonious.  In  one  case  it  was  held  that  where  by 
arrangement  between  the  stockholders  and  the  corpora- 
tion, the  stock  was  issued  as  fully  paid  up,  when  in  fact 
it  had  not  been  paid  to  the  amount  of  its  full  value,  but 
had  been  paid  for  in  property  at  a  fictitious  or  inflated 
value,  the  court  would  compel  a  payment  by  the  stock- 
holder, for  the  benefit  of  the  creditor  who  has  dealt  with 
the  corporation,  relying  upon  the  asserted  value  of  its 
assets,  to  the  full  amount  or  value  of  his  stock.2  This 
view  is  also  taken  in  a  later  case.3  In  another  case  where 
property  was  taken  at  a  great  overvaluation,  it  was  held 

§  155. 

i  Smith  v.  Hopkins,  10  Wash.  77;  38  Pac.  854. 
§  156. 

1  Manhattan  Trust  Co.  v.  Seattle  Coal  etc.  Co.,  19  Wash.  493;  53  Pac. 
951;  Adamant  Mnfg.  Co.  v.  Wallace,  16  Wash.  614;  48  Pac.  415;  Turner 
v.  Bailey,  12  Wash.  634;  42  Pac.  115. 

2  Adamant  Mnfg.  Co.  v.  Wallace,  supra. 

3  Dunlap  v.  Rauch,  24  Wash.  620;  64  Pac.  807. 


CAPITAL  STOCK  ^39 

that  such  an  apparent  overvaluation  was  fraudulent.4 
Later  the  court  in  construing  the  same  facts  held  this 
valuation  not  fraudulent.5  In  another  case  it  was  held 
that  where  property  was  taken  in  payment  for  stock  at 
a  double  valuation,  and  was  so  taken  without  any  inten- 
tion to  defraud,  that  a  judgment  creditor  of  the  corpora- 
tion could  not  recover  from  such  stockholder  the  differ- 
ence between  the  actual  value  of  the  property  and  the 
face  value  of  the  stock.6 

The  fair  rule  would  seem  to  be,  that  as  against  inno- 
cent creditors  of  the  corporation,  property  accepted  in 
payment  for  stock,  should  be  appraised  and  taken  at 
its  true  value.  If  creditors  deal  with  a  corporation 
with  knowledge  that  stock  subscriptions  have  been  paid 
for  in  property  at  a  fictitious  valuation,  they  are  estopped 
to  enforce  any  further  liability  against  the  subscriber.7 
The  fact  that  property,  accepted  in  payment  of  stock  at 
its  reasonable  value,  subsequently  depreciated,  will  not 
render  the  stockholder  liable  for  the  difference  between 
the  property  at  its  depreciated  price  and  the  face  value 
of  the  stock.8 

The  capital  stock  of  a  mining  corporation  may  be  rep- 
resented by  an  interest  or  share  in  a  mining  claim  and 
no  actual  subscription  to  the  capital  stock  is  necessary.9 

When  can  stock  subscriptions  be  enforced. 

§  157.  Under  our  statutes,  with  certain  exceptions, 
§  156. 

*  Manhattan  Trust  Co.  v.  Seattle  Coal  etc.  Co.,  16  Wash.  499;  48  Pac. 
333,  737. 

5  Manhattan  Trust  Co.  v.  Seattle  Coal  etc.  Co.,  supra. 
.  6  Kroenert  v.  Johnson,  19  Wash.  96;  52  Pac.  605. 

7  Adamant  Mnf  g.  Co.  v.  Wallace,  supra. 

8  Turner  v.  Bailey,  supra, 
a  Sec.  49. 


CAPITAL,  STOCK 

all  the  capital  stock  must  be  subscribed,  and  a  corpora- 
tion cannot  enforce  subscriptions  to  its  stock  until  all 
of  its  stock  has  been  subscribed,1  unless  there  has  been  a 
waiver  of  this  condition  by  the  stockholders,2  and  the 
fact  that  a  subscriber  has  made  a  payment  on  his  stock 
without  knowledge  of  the  fact  that  all  of  the  stock  had 
not  been  subscribed,  does  not  waive  his  right  to  object 
to  the  authority  of  the  corporation  to  enforce  his  sub- 
scription.3 Subscribers  to  the  stock  of  a  corporation 
cannot  escape  liability  on  the  ground  that  part  of  the 
stock  has  been  illegally  subscribed  when  they  have  sub- 
scribed with  knowledge  of  that  fact.4 

Manner  of  enforcing  subscriptions. 

§  158.  Subscriptions  to  the  capital  stock  of  a  corpor- 
ation may  be  enforced  by  the  corporation  by  suit  as  on  a 
contract  for  the  payment  of  money.1  The  receiver  of 
an  insolvent  corporation  may  bring  a  separate  suit 
against  a  stockholder  to  recover  the  sum  due  upon  his 
shares  of  stock.2  The  presumption  is,  that  a  corporation 
in  bringing  suit  on  stock  subscriptions  has  acted  regu- 
larly according  to  its  by-laws,  and  if  there  is  any  by-law 

§  157. 

1  Denny  Hotel  Co.  v.  Schram,  6  Wash.  134 ;  32  Pac.  1002 ;  36  Am.  St. 
130;  cited  in  Denny  Hotel  Co.  v.  Gilmore,  6  Wash.  152;  32  Pac.  1004; 
Elderkin  v.  Peterson,  8  Wash.  674;  36  Pac.  1089. 

2  Elderkin  v.  Peterson,  supra;   Birge  v.  Browning,  11  Wash.  249;  39 
Pac.  643. 

3  Denny  Hotel  Co.  v.  Gilmore,  supra;  Birge  v.  Browning,  supra. 

<  Cole  v.  Satsop  R.  R.  Co.,  9  Wash.  487;  37  Pac.  700;  43  Am.  St.  858. 

§   158. 

1  Puget  Sound  etc.  Ry.  Co.  v.  Oullette,  7  Wash.  265;  34  Pac.  929. 

2  Elderkin  v.  Peterson,  8  Wash.  674;  36  Pac.  1089. 


CAPITAL   STOCK 

which  renders  their  action  irregular,  it  is  a  matter  of 
defense  which  should  be  pleaded.3 

In  general. 

Amount  of  capital  stock. 

§159.  The  articles  of  incorporation  must  state  the 
amount  of  the  capital  stock.1  The  amount  is  arrived  at 
by  agreement  of  the  parties.  A  banking  corporation, 
however,  must  have  at  least  twenty-five  thousand  dollars 
capital  stock,2  a  trust  company  twenty-five  thousand  dol- 
lars or  more,  according  to  the  population  of  the  city  or 
town  where  located.3  A  building  and  loan  association 
must  have  an  authorized  capital  of  two  million  dollars.4 
Certain  corporations  organized  for  educational,  social 
or  charitable  objects  do  not  need  any  capital  stock.5 

Number  and  face  value  of  shares  of  capital  stock. 

§  160.  The  articles  of  incorporation  must  state  the 
number  of  shares  into  which  the  capital  stock  is  divided.1 
The  face  value  of  the  shares,  is  with  few  exceptions,  left 
to  agreement  between  the  parties.2  The  face  value  of  the 
shares  of  a  bank  or  trust  company,3  however,  must  be 
one  hundred  dollars. 

§  158. 

3  Puget  Sound  Etc.  Co.  v.  Oullette,  supra. 
§  159. 

1  Sec.  24. 

2  Sec.  34. 

3  Laws  of  1903,  p.  367. 

*  Sec.  7142,  Pierce's  Code. 
5  Sec.  7083. 
§  160. 

1  Sec.  24. 

2  Sec.  34. 

3  Laws  of  1903,  p.  367. 


|42  CAPITAL   STOCK 

Increase  or  decrease  of  the  capital  stock. 

§  161.  The  capital  stock  may  be  increased  or  de- 
creased by  complying  with  certain  statutory  provisions.1 
The  capital  cannot  be  decreased  by  a  misuse  of  the  cor- 
porate assets.2 

The  capital  stock  is  a  trust  fund. 

§  162.  The  capital  stock  is  a  trust  fund  for  the  benefit 
of  the  creditors  of  the  corporation.1  The  creditors  have 
a  right  to  insist  that  the  capital  stock  shall  be  kept  intact. 
Unpaid  subscriptions  to  the  capital  stock  are  assets  of 
the  corporation  and  a  trust  fund  for  the  benefit  of  all  the 
creditors  of  the  corporation.2  A  stockholder  who  has 
acquired  all  the  stock  of  the  corporation  cannot  transfer 
or  dispose  of  the  corporate  property  to  secure  an  indi- 
vidual indebtedness  to  the  prejudice  of  the  corporate 
creditors.3  The  corporation  cannot  use  the  corporate 
funds  to  purchase  stock  from  its  stockholders.4 

§  161. 

1  Sees.  42,  43  and  44,  where  procedure  is  fully  set  out;  see  also  Sec.  37. 

2  Tait  v.  Pigott,  32  Wash.  344;  73  Pac.  364. 

§  162. 

iConover  v.  Hull,  10  Wash.  673;  39  Pac.  166;  45  Am.  St.  810;  cited 
in  Compton  v.  Schwabacher,  15  Wash.  306;  46  Pac.  338;  Biddle  Pur.  Co. 
v.  Port  Townsend  Steel  Co.,  16  Wash.  681;  48  Pac.  407;  Burrell  v.  Ben- 
nett, 20  Wash.  644;  56  Pac.  375;  State  ex  rel.  Strohl  v.  Superior  Ct.,  20 
Wash.  545;  56  Pac.  35;  45  L.  R.  A.  177;  Tait  v.  Pigott,  32  Wash.  344; 
23  Pac.  364. 

2  Burch  v.  Taylor,  1  Wash.  245;  24  Pae.  438. 

3  Stewart  v.  Gould,  8  Wash.  367;  36  Pac.  277. 
*  Tait  v.  Pigott,  supra. 

5  See  Sec.  222,  Rights  of  Creditors  of  Insolvent  Corporations. 


CAPITAL  STOCK  143 

Overissued  stock. 

§  163.  Stock  issued  in  excess  of  the  amount  fixed  by 
the  articles  of  incorporation  is  void  even  in  the  hands  of 
an  innocent  purchaser.  The  bona  fide  holder  of  over- 
issued stock,  issued  by  the  proper  officers  of  the  corpora- 
tion, may  sue  the  corporation  and  recover  the  damages 
suffered. 


CHAPTER  VH. 

STOCKHOLDERS. 

§  164.     Who  can  be  stockholders. 

165.  How  to  become  stockholders. 

166.  Who  are  stockholders. 

Rights  of  stockholders. 

§  167.     Right  to  participate  in  management. 

168.  Right  to  inspect  books   and  records   and  remedy 

for  refusal  of  this  right. 

169.  Right  to  dividends. 
170.     Liabilities  of  stockholders. 

Who  can  be  stockholders. 

§  164.  Any  person  capable  of  contracting,  can  become 
a  stockholder  in  a  corporation,  provided,  however,  that  a 
corporation  cannot  purchase  or  hold  its  own  stock  or 
purchase  or  hold  stock  in  another  corporation,  except 
under  certain  circumstances.1  At  least  one  trustee,  and 
consequently  one  stockholder,  must  be  a  resident  of  the 
State  of  Washington.2  If  the  majority  of  the  stockholders 
of  a  corporation  are  aliens,  a  conveyance  of  real  estate  to 
the  corporation  may  be  avoided  by  the  state.3 

§  164. 

1  See  Sees.  137  and  138. 

2  Sec.  29. 

3  State  ex  rel.  Winston  v.  Hudson  Land  Co.,  19  Wash.  85;  52  Pac.  574; 
40  L.  R.  A.  430;  see  Hastings  v.  Anacortes  Packing  Co.,  29  Wash.  224; 
69  Pac.  776. 


STOCKHOLDERS 

How  to  become  stockholders. 

§  165.  If  a  corporation  has  a  capital  stock,  member- 
ship is  attained  by  the  purchase  of  shares  of  stock.  If 
the  corporation  has  no  capital  stock,  membership  is  at- 
tained by  conforming  to  the  rules  laid  down  in  its  articles 
of  incorporation  and  by-laws. 

Who  are  stockholders. 

§  166.  Any  person  owning  a  share  of  stock  is  a  stock- 
holder. In  many  cases,  however,  the  courts  have  found 
great  difficulty  in  determining  who  are  liable  as  stock- 
holders. A  subscriber  to  the  capital  stock  of  a  corpora- 
tion whose  subscription  is  unpaid,  but  who  has  assigned 
his  stock  with  the  consent  of  the  corporation,  is  not  a 
stockholder.1  A  person  who  holds  stock  in  a  corporation, 
under  an  agreement  that  if  discharged  from  his  employ- 
ment by  the  corporation,  he  can  return  the  stock  and  get 
the  money  paid  for  it,  is  a  stockholder.2  A  stockholder 
who  has  pledged  his  stock  is  still  a  stockholder  and  en- 
titled to  vote  his  stock.3  A  person  who  has  transferred 
his  stock,  although  such  stock  is  not  registered  on  the 
books  of  the  company,  is  not  a  stockholder  so  that  his 
stock  can  be  sold  on  execution,4  while  he  would  be  a  stock- 
holder for  the  purpose  of  voting  the  stock.5  A  person  is 

§  166. 

1  Stewart  v.  Walla  Print.  &  Pub.  Co.,  1  Wash.  521;  20  Pac.  605. 

2  Yeaton  v.  Eagle  Oil  etc.  Co.,  4  Wash.  183;  29  Pac.  1051. 

3  Spokane  v.  Amsterdamsch  etc.,  22  Wash.  172;  60  Pac.  141. 

<Port  Townsend  Nat'l  Bank  v.  Port  Townsend  Gas  and  Fuel  Co.,  6 
Wash.  597;  34  Pac.  155;  cited  in  Mapleton  Bank  v.  Standrod  (Idaho), 
71  Pac.  121. 

6  Sec.  33. 

10  D 


146  STOCKHOLDERS 

not  a  stockholder  in  a  company  when  he  has  assigned  his 
stock  to  another  for  the  purpose  of  selling  the  same  and 
this  person  has  actually  sold  the  stock  to  an  innocent  pur- 
chaser.6 

Rights  of  stockholders. 

Right  to  participate  in  management. 

§  167.  A  stockholder  has  the  right  to  attend  the  meet- 
ings of  the  stockholders  and  participate  in  the  manage- 
ment, and  to  see  that  the  corporate  property  is  not 
diverted  from  the  objects  of  the  corporation  as  set  out 
in  the  articles  of  incorporation.1  Where  the  rights  of 
stockholder  are  prescribed  by  statute,  they  cannot  be 
contravened  by  the  enactment  of  corporation  by-laws.2 

Right  to  inspect  books  and  records  and  remedy  for  refusal  of 
this  right. 

§  168.  A  stockholder  has  the  right,  at  reasonable 
times,  to  examine  and  inspect  the  books  and  records  of  the 
corporation,1  when  his  purpose  is  to  inform  himself  of 
the  corporate  affairs,  and  upon  refusal,  he  may  enforce 
this  right  by  mandamus.2  The  presumption,  when  a  stock- 
holder applies  for  an  inspection  of  the  corporate  books 

§  166. 

6  Jones  v.  Western  Mnfg.  Co.,  32  Wash.  375;  73  Pac.  359. 

i  See  the  case  of  Jones  v.  Western  Mnfg.  Co.,  27  Wash.  136;  67  Pac. 
586,  on  evidence  of  ownership. 

s  See  case  of  Hardin  v.  White  Swan  Mining  &  Milling  Co.,  26  Wash. 
583;  67  Pac.  236. 
§   167. 

i  Parsons  v.  Tacoma  Smelting  Co.,  25  Wash.  492;  65  Pac.  765. 

2Trowbridge  v.  Hamilton  et  al.,  18  Wash.  686;  52  Pac.  328. 
§   168. 

1  Sec.  40;  State  ex  rel.  Weinberg  v.  Pacific  Brewing  &  Malting  Co.,  21 
Wash.  451;  58  Pac.  584;  47  L.  R.  A.  208. 

2  State  ex  rel.  Weinberg  v.  Pacific  Brewing  etc.  Co.,  supra. 


STOCKHOLDERS  147 

A 

and  accounts,  is  that  the  inspection  is  sought  in  the  inter- 
ests of  the  corporation,  and,  when  the  refusal  is  based  on 
the  ground  that  the  inspection  is  sought  for  purposes 
antagonistic  to  the  corporation,  the  burden  is  upon  the 
officers  refusing  inspection  to  establish  that  the  stock- 
holder is  not  proceeding  in  good  faith.3 

Right  to  dividends. 

§  169.  A  stockholder  has  a  right  to  the  dividends 
earned  by  his  stock.  The  matter  of  declaring  a  dividend 
rests  in  the  sound  discretion  of  the  board  of  trustees.  The 
trustees,  however,  cannot  in  bad  faith  deprive  the  stock- 
holder of  the  dividends  on  his  stock.  Dividends  can  be 
declared  only  from  the  net  profits  arising  out  of  the  busi- 
ness of  the  corporation.1 

Liabilities  of  stockholders. 

§  170.  A  stockholder  of  a  corporation 'is  personally 
liable  to  the  creditors  of  a  corporation  only  to  the  amount 
remaining  unpaid  upon  his  subscription  to  the  capital 
stock,1  except  in  the  case  of  a  banking  corporation  or  a 
trust  company.  In  a  banking  corporation,  a  stockholder 
is  individually  liable,  equally  and  ratably,  and  not  one  for 
the  other,  for  all  contracts,  debts,  and  engagements  of 
such  corporation  accruing  while  they  remain  such  a 
stockholder,  to  the  extent  of  their  stock  therein  at  the  par 
value  thereof,  in  addition  to  the  amount  invested  in  such 

§  168. 

s  State  ex  rel.  Weinberg  v.  Pacific  Brewing  etc.  Co.,  supra;  cited  in 
Duval  v.  Miller,  94  Md.  697;  51  Atl.  573. 
§   169. 

i  Sec.  37. 
§  170. 

i  Sec.  38. 


148  STOCKHOLDERS 

shares.2  This  liability  is  secondary3  and  not  a  primary 
liability,  and  creditors  must  first  attempt  to  enforce  their 
claims  against  the  corporation,4  and  it  can  be  enforced 
only  after  exhausting  corporate  assets.5  In  a  trust  com- 
pany, the  stockholders  in  case  of  default  in  the  payment 
of  any  debt  or  liability  contracted  by  such  corporation 
are  individually  responsible,  equally  and  ratably,  for  the 
then  existing  debts  of  the  corporation,  not  exceeding, 
however,  the  par  value  of  their  respective  shares  of  stock 
held  by  them,  at  the  time  of  the  default.6  If  any  insol- 
vent bank  has  done  other  kinds  of  business  than  a  bank- 
ing business,  the  proceeds  resulting  from  the  double  lia- 
bility of  the  stockholders  should  be  applied  to  the  bank 's 
liability.7 

§  170. 

2  Sec.  38;  Shuey  v.  Holmes,  21  Wash.  223;  57  Pac.  818. 
a  Wilson  v.  Book,  13  Wash.  676;  43  Pac.  939. 

4  Wilson  v.  Book,  supra,  cited,  Shuey  v.  Adair,  24  Wash.  378;  64  Pac. 
536;  Barton  Nat'l  Bank  v.  Atkins,  72  Vt.  33;  47  Atl.  179;  Howarth  v. 
Angle,  55  N.  Y.  Supp.  1109;   MicLaughlin  v.  O'Neill,  7  Wyo.  215;    51 
Pac.  246-247. 

5  Wilson  v.  Book,  supra;  Farmers  L.  &  T.  Co.  v.  Funk,  49  Neb.  364- 
366-367;  in  Mallon  v.  Hyde,  76  Fed.  388,  held  rule  not  applicable  in  case 
of  fraudulent  concealment. 

6  Laws  of  1903,  p.  367. 

TKiggins  v.  Munday,  19  Wash.  233;  52  Pac.  855. 


CHAPTER  VIII. 

TRANSFER  OR  PLEDGE  OF  SHARES. 

§  171.     Right  to  transfer  shares. 

172.  Manner  of  transferring  shares. 

173.  Effect  of  a  transfer  of  shares. 

174.  As  regards  a  stockholder's  creditors. 

175.  As  regards  dividends. 

176.  As  regards  the  corporation  and  the  corporation's 

creditors. 

177.  Transfers  in  violation  of  a  trust. 

178.  Remedy  for  refusal  of  corporation  to  transfer  shares. 

179.  Contracts  for  sale  of  shares. 

180.  Pledge  of  shares — Right  to  pledge  shares. 

181.  Effect  of  a  pledge  of  shares. 

Right  to  transfer  shares. 

§  171.  The  stock  of  a  corporation  is  personal  property 
and  is  transferable.1 

Manner  of  transferring  shares. 

§  172.  Stock  in  a  corporation  must  be  transferred  in 
the  manner  prescribed  by  the  by-laws  of  the  corporation.1 
No  transfer  of  stock  shall  be  valid  except  between  the 
parties  thereto,  until  the  same  shall  have  been  entered 
upon  the  books  of  the  corporation  so  as  to  show  the  names 
of  the  parties,  by  and  to  whom  transferred,  the  number 
and  designation  of  the  shares,  and  the  date  of  the  trans- 

§  171. 

i  Sec.  33. 
§  172. 
i  Sec.  33. 


150          TRANSFER  OR  PLEDGE  OF  SHARES 

fer.2  Although  a  transfer  of  shares  of  stock  in  a  corpora- 
tion is  not  registered,  it  passes  a  good  title  against  a 
creditor  of  the  transferrer.3 

Effect  of  a  transfer  of  shares. 

§  173.  The  effect  of  a  transfer  of  stock  in  a  corpora- 
tion, as  regards  the  payment  of  assessments  or  unpaid 
installments  upon  the  stock,  is  to  substitute  the  transferee 
to  the  liability  of  paying  future  assessments  and  to  release 
the  transferrer.1  This,  however,  would  not  be  the  case 
unless  the  transfer  was  made  in  good  faith.2  Assessments 
or  installments  due  and  unpaid  when  the  transfer  was 
made  must  be  paid  by  the  transferrer.  A  stockholder 
who  has  transferred  his  stock  and  thereafter  executed  his 
note  to  the  corporation  and  resumed  the  payment  of  the 
stock  is  again  liable  for  the  payment  of  the  stock.3 

As  regards  the  stockholder's  creditors. 

§  174.  A  transfer  of  stock  in  good  faith  is  good,  even 
if  not  registered,  as  against  the  creditors  of  the  stock- 
holder.1 

§  172. 

2  Sec.  33. 

3  Port  Townsend  Nat'l  Bank  v.  Port  Townsend  Gas  &  Fuel  Co.,  6 
Wash.  597;  34  Pac.  155,  cited  in  Mapleton  Bank  v.  Standrod   (Idaho), 
71  Pac.  121. 

§  173. 

1  Stewart  v.  Walla  Walla  etc.  Pub.  Co.,  1  Wash.  521;  20  Pac.  605. 

2  Stewart  v.  Walla  Walla  etc.  Pub.  Co.,  supra. 

3Z.  C.  Miles  Co.  v.  Robertson,  5  Wash.  352;  31  Pac.  970. 

§   174. 

i  Port  Townsend  Nat'l  Bank  v.  Port  Townsend  Gas  &  Fuel  Co.,  6 
Wash.  597;  34  Pac.  155;  cited  in  Mapleton  Bank  v.  Standrod  (Idaho), 
71  Pac.  121. 


TRANSFER  OR  PLEDGE  OF  SHARES 

As  regards  dividends. 

§  175.  Earnings  not  yet  declared  as  dividends,  pass 
with  a  transfer  of  stock.  Dividends  earned  and  declared 
do  not  pass  by  a  transfer  of  stock  although  payable  after 
the  transfer.  The  right  to  the  dividends  can,  of  course, 
be  fixed  by  agreement  between  the  parties. 

As  regards  the  corporation  or  the  corporation's  creditors. 

§  176.  A  transfer  of  stock,  if  completed  and  reg- 
istered, is  good  as  against  the  corporation  or  the  corpora- 
tion's creditors,  but,  if  not  registered,  is  not  good  as 
against  the  corporation  or  the  corporation's  creditors.1 
The  statutory  provisions  requiring  the  registration  of 
transfers  is  for  the  benefit  of  the  corporation  or  its 
creditors.2  A  transfer  of  stock,  even  if  irregular,  if  ac- 
cepted and  acquiesced  in  by  the  corporation,  is  binding 
upon  it.3 

Transfers  in  violation  of  a  trust. 

§  177.  A  purchaser  of  stock  who  has  purchased  from 
one  who  holds  the  stock  in  trust,  and  who  has  transferred 
the  stock  in  violation  of  his  trust,  will  take  a  good  title  if 
he  has  no  actual  or  constructive  notice  of  the  trust. 

Remedy  for  refusal  of  corporation  to  transfer  shares. 

§  178.  If  a  corporation  wrongfully  refuses  to  register 
§  176. 

i  Port  Townsend  National  Bank  v.  Port  Townsend  Gas  &  Fuel  Co.,  6 
Wash.  597-600;  34  Pac.  155. 

2- Port  Townsend  National  Bank  v.  Port  Townsend  Gas  &  Fuel  Co., 
supra;  Lacaff  v.  Dutch  Miller  Mining  etc.  Co.,  31  Wash.  566;  72  Pac. 
122. 

3  Stewart  v.  Walla  Wjalla  etc.  Pub.  Co.,  1  Wash.  521;  20  Pac.  605. 


152          TRANSFER  OR  PLEDGE  OF  SHARES 

a  transfer  of  shares  on  its  books  and  to  issue  a  new  cer- 
tificate, the  stockholder  can  sue  the  corporation  and  re- 
cover damages,  or  he  can  sue  the  person  that  prevents 
the  corporation  from  registering  the  transfer  and  recover 
damages,  or  he  can  bring  a  suit  in  equity  and  compel  the 
corporation  to  register  the  transfer  and  issue  a  new  cer- 
tificate. An  action  for  damages  for  the  value  of  stock  in 
a  corporation,  based  on  a  refusal  to  transfer,  cannot  be 
maintained  by  a  stockholder  against  another  corporation 
which  has  succeeded  to  all  the  property,  rights  and  inter- 
ests of  the  corporation  which  issued  the  stock.1 


Contracts  for  the  sale  of  shares. 

§  179.  A  contract  can  be  made  for  the  sale  of  shares 
of  stock  in  a  corporation.  Such  contracts  are  governed 
by  the  same  principles  as  other  contracts  for  the  sale  of 
personal  property. 


Pledge  of  shares — Right  to  pledge. 

§  180.  Any  stockholder  may  pledge  his  stock  by  a  de- 
livery of  the  certificate  or  other  evidence  of  his  interest.1 

§  178. 

1  Huggins  v.  Milwaukee  Brewing  Co.,  10  Wash.  579;  39  Pac.  152. 

2  See  case  of  Lacaff  v.  Dutch  Miller  Mining  &  Smelting  Co.,  31  Wash. 
566;  72  Pac.  122;  an  action  by  an  assignee  of  stock  to  compel  issuance 
of  stock  to  him. 

§  180. 

i  Sec.  36,  Port  Townsend  Nat'l  Bank  v.  Port  Townsend  Gas  &  Fuel 
Co.,  6  Wash.  597;  34  Pac.  155;  American  Bonding  &  Trust  Co.  v.  Pacific 
Brewing  etc.  Co.,  33  Wash.  043;  74  Pac.  826. 


TRANSFER  OR  PLEDGE  OF  SHARES 

Effect  of  a  pledge  of  shares. 

§  181.  The  effect  of  a  pledge  of  shares  is  to  give  the 
person  to  whom  the  shares  are  pledged  a  lien  upon  the 
stock.1  The  pledgee's  interest  cannot  be  divested  by 
judicial  sale  against  the  owner.2  The  owner's  interest  can 
be  sold  subject  to  the  interest  of  the  pledgee.3  The  cor- 
poration is  bound  to  take  notice  that  its  shares  may  be 
pledged,  and  if  the  corporation  transfers  the  shares  or 
pays  money  on  the  shares  to  an  owner  who  has  pledged 
his  stock,  without  a  delivery  of  the  stock  certificates,  it  is 
liable  in  damages.4  The  owner  of  pledged  stock  may  vote 
the  same  at  meetings  of  the  stockholders  of  the  corpora- 
tion,5 and  the  vote  of  the  owner  will  bind  the  pledgee.6  A 
pledgee  cannot  have  the  stock  transferred  to  him  on  the 
books  of  the  corporation  without  first  obtaining  title  to 
the  stock.7 

§  181. 

1  Dearborn  v.  Washington  Savings  Bank,  18  Wash.  8;  50  Pac.  575. 

2  Dearborn  v.  Washington  Savings  Bank,  supra;  Port  Townsend  Nat'l 
Bank  v.  Port  Townsend  Gas  &  Fuel  Co.,  6  Wash.  597;  34  Pac.  155. 

3  Port  Townsend  Nat'l  Bank  v.  Port  Townsend  Gas  &  Fuel  Co.,  supra; 
Hardin  v.  White  Swan  Mining  etc.  Co.,  26  W^sh.  583;  67  Pac.  236. 

4  Brown  v.  Union  Savings  Ass'n,  28  Wash.  657;  69  Pac.  383. 

5  Sec.  36. 

6  Spokane  v.  Amsterdamsch,  22  Wash.  172;  60  Pac.  141;  quoted  in  Cor- 
coran v.  Sonota  Min.  &  Mill  Co.  (Idaho),  71  Pac.  130,  cited  in  Dearborn 
v.  Wash.  Sav.  Bank,  18  Wash.  8;  50  Pac.  575;  Mapleton  Bank  v.  Stand- 
rod  (Idaho),  71  Pac.  121. 

7  American  Bonding  and  Trust  Co.  v.  Pacific  Brewing  &  Malting  Co., 
33  Wash.  043;  74  Pac.  826. 


CHAPTER  IX. 

CORPORATE  MEETINGS  AND  ELECTIONS. 

Stockholders'  meetings. 

§  182.     Notice  of  stockholders'  meetings. 

183.  Eegular  or  fixed  meetings. 

184.  Special  meetings. 

185.  Time  and  place  of  meeting. 

186.  Qualifications  of  voters. 

187.  Quorum. 

188.  Elections — Manner  of  voting. 

189.  Records  of  stockholders'  meetings. 

Trustees'  meetings. 

§  190.     Notice  of  trustees'  meetings. 

191.  First  meeting. 

192.  Regular  meetings. 

193.  Special  meetings. 

194.  Time  and  place  of  meeting. 

195.  Qualifications  of  trustees. 

196.  Manner  of  voting. 

197.  Quorum. 

198.  Election  of  officers. 

199.  Record  of  trustees'  meetings. 

Stockholders'  meetings. 

Notice  of  stockholders'  meetings. 

§  182.  If  all  the  stockholders  are  present  at  any  meet- 
ing, whether  regular  or  special,  no  informality  or  want  of 
notice  will  invalidate  the  proceedings. 


MEETINGS    AND    ELECTIONS  ^55 

Regular  or  fixed  meetings. 

§  183.  No  notice  is  necessary  for  meetings,  the  time 
and  place  of  which  is  fixed  by  the  by-laws  of  the  corpora- 
tion, unless  the  by-laws  provide  that  notice  must  be  given. 
If  the  time  and  place  is  not  fixed,  notice  of  a  meeting 
must  be  given  to  every  stockholder  or  member  entitled 
to  vote. 


Special  meetings. 

§  184.  Notice  must  be  given  of  all  special  meetings, 
and  the  matters  to  come  before  the  meeting  must  be 
specified  in  the  notice  and  only  such  matters  as  are  men- 
tioned in  the  notice  can  be  acted  on  at  the  meeting.  If 
no  notice  is  provided  by  the  by-laws  of  the  corpora- 
tion, notice  must  be  given  personally,  a  reasonable 
length  of  time  before  the  meeting,  and  must  specify 
the  time  and  place  of  meeting.  If  the  by-laws  provide 
for  a  notice,  this  notice  must  be  given.  Proof  of  notice 
need  not  appear  upon  the  minutes  but  may  be  supplied 
otherwise  and  until  the  contrary  appears  the  meeting 
will  be  presumed  regular.1 

Time  and  place  of  meeting. 

§  185.  The  stockholders '  meetings  must  be  held  at  the 
time  and  place  fixed  by  the  by-laws  or  stated  in  the  notice. 
The  time  must  be  reasonable,  and  the  place  of  meeting 
must  be  set  where  it  will  not  cause  stockholders  great  in- 
convenience. The  meeting  must  be  held  within  the  state.1 

§  184. 
i  Budd  v.  Walla  Walla  P.  &  P.  Co.,  2  Wash.  T.  347;  7  Pac.  896. 

§  185. 
i  Sec.  29. 


156  MEETINGS    AND    ELECTIONS 

Qualifications  of  voters. 

§  186.  The  stock-book  of  the  corporation  determines 
who  are  entitled  to  vote.1  Transfers  of  stock  are  not 
good  against  the  corporation  unless  recorded,  and  the 
corporation  cannot  be  compelled  to  recognize  a  stock- 
holder unless  the  transfer  is  recorded.2  Any  person 
who  holds  stock  as  executor,  administrator,  guardian  or 
trustee,  shall  represent  such  stock  at  all  meetings  of  the 
company  and  may  vote  accordingly  as  a  stockholder.3 
A  stockholder  who  has  pledged  his  stock  by  a  delivery 
of  his  stock  or  in  any  other  manner  may  vote  the  same.4 

Quorum. 

§  187.  The  statute  does  not  fix  the  number  of  stock- 
holders necessary  for  a  quorum,  and  unless  the  number 
is  fixed  by  the  by-laws  of  the  corporation,  any  two  stock- 
holders can  hold  a  valid  stockholders'  meeting.  If  the 
by-laws  fix  the  number  of  stockholders  necessary  for  a 
quorum  or  the  amount  of  stock  that  must  be  represented 
to  make  a  quorum  that  number  or  amount  of  stock  must 
be  present  in  order  to  transact  business. 

Elections — Manner  of  voting. 

§  188.  The  trustees  of  the  corporation,  after  the  trus- 
tees first  elected,  shall  be  elected  by  the  stockholders.1 
The  election  must  be  held  within  the  state.2  All  elections 

§  186. 

1  Sec.  33. 

2  Sec.  33. 
s  Sec.  35. 
4  Sec.  36. 

§  188. 

1  Sec.  29. 

2  Sec.  29. 


MEETINGS    AND    ELECTIONS 

must  be  by  ballot,  and  the  person  or  persons  receiving 
the  greatest  number  of  votes  shall  be  declared  trustee 
or  trustees.3  The  stock  may  be  voted  either  in  person 
or  by  proxy.4  In  the  absence  of  any  provision  in  the 
by-laws,  a  stockholder  has  one  vote  for  each  share  of 
stock.  Our  statute  does  not  provide  for  cumulative  vot- 
ing, but  the  by-laws  of  the  corporation  can  provide  for 
cumulative  voting.  The  by-laws  may  limit  the  stock- 
holder to  a  single  vote  or  one  vote  for  every  full  share 
of  paid  up  stock,  or  its  equivalent  in  assessable  stock, 
disregarding  the  number  of  shares  he  may  own.5 

Record  of  stockholders'  meetings. 

§  189.  The  minutes  of  stockholder 's  meetings,  if  prop- 
erly authenticated,  are  the  best  evidence  of  the  proceed- 
ings. The  proceedings  of  a  stockholder's  meeting  may, 
however,  be  proved  by  other  evidence  or  even  by  parol 
evidence. 

Trustees'  meetings. 

Notice  of  trustees '  meetings. 

§  190.  If  all  the  trustees  are  present  at  any  meeting, 
the  failure  to  give  notice  of  the  meeting  will  not  invali- 
date the  proceedings. 

First  meeting. 

§  191.  The  first  meeting  of  the  trustees  shall  be  called 
by  a  notice  signed  by  one  or  more  persons  named  as  trus- 
tees in  their  articles,  setting  forth  the  time  and  place  of 
meeting,  which  notice  shall  be  delivered  personally  to 

§'  188. 

3  Sec.  29. 

4  Sec.  29. 

5  Sec.  29. 


158  MEETINGS    AND    ELECTIONS 

each  trustee,  or  published  at  least  twenty  days  in  some 
newspaper  in  the  county  in  which  the  principal  place  of 
business  of  the  corporation  is  located,  or  if  no  newspaper 
is  published  in  that  county,  then  in  some  newspaper 
nearest  thereto  in  the  state.1 

Regular  meetings. 

§  192.  No  notice  is  ordinarily  necessary  for  meetings 
fixed  by  the  by-laws  of  the  corporation.  It  is  good  prac- 
tice, and  it  has  been  held  in  some  states,  that  in  case  busi- 
ness of  unusual  or  great  importance  is  to  come  before 
the  meeting  it  is  necessary  to  give  notice  of  this  business. 

Special  meetings. 

§  193.  A  notice  must  be  given  of  all  special  meetings 
of  the  board  of  trustees.  If  the  by-laws  provide  a  manner 
of  giving  notice,  either  this  notice  or  a  personal  notice 
must  be  given,  a  reasonable  length  of  time  before  the 
meeting,  and  the  notice  must  inform  the  trustees  of  the 
business  to  come  before  the  board. 

Time  and  place  of  meeting. 

§  194.  The  trustees'  meetings  are  usually  held  at  the 
principal  office  of  the  company,  and  the  regular  times  of 
meeting  are  usually  fixed  by  the  by-laws.  The  meetings 
must  be  held  at  the  time  and  place  fixed  by  the  by-laws 
or  in  the  notice  of  the  meeting.  The  time  of  meeting  must 
be  reasonable,  and  the  place  reasonably  convenient  for 
the  trustees.  Our  statute  does  not  provide  for  or  author- 
ize the  holding  of  trustees '  meetings  outside  of  the  state. 

§  191. 

i  Sec.  32. 


MEETINGS    AND    ELECTIONS  150 

Probably  a  valid  meeting  of  the  trustees  could  be  held 
outside  the  state  to  authorize  contracts  or  appoint  agents 
or  do  such  acts  as  agents  of  a  corporation  can  do,  but  a 
valid  meeting  could  probably  not  be  held  to  pass  by-laws, 
or  elect  officers,  or  to  make  calls  or  assessments  or  to  do 
other  like  corporate  acts. 

Qualifications  of  trustees. 

§  195.  Our  statute  requires  the  trustees  to  be  elected 
from  the  stockholders  of  the  corporation,1  and  since 
transfers  of  stock  are  not  good  as  against  the  corpora- 
tion unless  registered,2  only  such  persons  are  eligible  for 
election  as  trustees  as  are  stockholders  on  the  books  of 
the  corporation.  If  a  trustee  transfers  his  stock  and  the 
transfer  is  registered  he  ceases  to  be  a  trustee  without 
any  act  on  the  part  of  the  corporation.  At  least  one  trus- 
tee must  be  a  resident  of  the  state.3  Our  statute  requires 
the  trustees  of  a  corporation  to  take  an  oath  of  office 
before  entering  on  the  duties  of  their  office,  this  oath 
to  be  in  the  form  provided  by  the  laws  of  this  state.  No 
form  of  oath  has  been  provided,  so  it  has  become  common 
practice  to  have  the  trustees  take  an  oath  to  faithfully 
and  conscientiously  perform  their  duties  and  to  file  the 
oath  of  office  with  the  records  of  the  corporation.  Since 
the  laws  of  the  state  have  failed  to  provide  a  form  of 
oath  probably  the  oath  is  not  a  necessary  qualification 
for  a  trustee.  A  trustee  is  not  qualified  to  act  on  matters 
in  which  he  is  personally  interested.4 

§  195. 

i  Sec.  29. 
2 -Sec.  33. 

3  Sec.  29. 

4  Budd  v.  Walla  Walla  P.  &  P.  Co.,  2  Wash.  T.  347;  7  Pac.  896;  Par- 
sons v.  Tacoma  Smelting  Co.,  25  Wash.  492;  65  Pac.  765. 


160  MEETINGS    AND    ELECTIONS 

Manner  of  voting. 

§  196.  The  trustees  are  not  required  to  vote  by  ballot 
and  unless  the  by-laws  of  the  corporation  require  a  vote 
by  ballot,  the  trustees  can  vote  in  any  manner  they  see 
fit,  in  order  to  arrive  at  the  will  of  the  majority  of  the 
board.  The  general  rule  is  that  trustees  must  act  as  a 
board,  and  seperate  action  by  all  of  the  trustees  of  a 
corporation,  not  meeting  as  a  board  of  trustees,  is  not 
the  action  of  the  board  or  binding  upon  the  corporation, 
unless  subsequently  ratified.  It  has  been  held  in  our 
state,  however,  that  a  bond  executed  without  the  direct 
authority  of  a  resolution  by  the  board  of  trustees  will 
not  invalidate  the  bond  where  a  majority  of  the  trustees 
were  in  consultation  about  it  prior  to  its  execution  and 
consented  thereto.1  Trustees  must  act  in  person  and 
cannot  vote  by  proxy. 

Quorum. 

§  197.  A  majority  of  the  whole  number  of  trustees 
shall  form  a  board  for  the  transaction  of  business,  and 
every  decision  of  a  majority  of  the  persons  duly  assembled 
as  a  board  shall  be  valid  as  a  corporate  act.1  It  was  held 
in  a  case  where  trustees  of  a  corporation  were  elected  by 
a  minority  of  the  trustees,  to  fill  vacancies  in  their  board, 
that  the  persons  elected  were  de  facto  officers,  and  that 
having  entered  peacefully  into  the  possession  of  office, 
their  acts  as  such  trustees,  within  the  scope  of  the  cor- 
poration's ordinary  business  could  not  be  questioned  by 

§  196. 

i  Wheeler,  Osgood  &  Co.  v.  Everett  Land  Co.,  14  Wash.  630;  45  Pac. 
316. 

§   197. 
i  Sec.  31. 


MEETINGS    AND    ELECTIONS 

strangers.2    The  stockholders,  however,  would  have  the 
right  to  question  the  validity  of  such  an  election.3 

Election  of  officers. 

§  198.  The  names  and  titles  of  the  officers  of  a  cor- 
poration are  fixed  by  the  by-laws.  These  officers  are  usu- 
ally elected  by  the  board  of  trustees  at  its  first  meeting. 
If  the  trustees  are  not  elected  on  the  date  set  by  the 
by-laws,  the  trustees  hold  office  until  their  successors  are 
elected  and  qualified.1  Vacancies  occurring  in  the  board 
of  trustees  by  reason  of  the  death  or  resignation  of  a 
trustee,  or  other  cause,  except  the  removal  of  a  trustee 
by  the  stockholders,  shall  be  filled  by  the  board  of  trus- 
tees.2 


Records  of  trustees'  meetings. 

§  199.  When  it  is  essential  to  show  the  proceedings 
of  the  board  of  trustees  of  a  corporation,  it  is  compe- 
tent to  prove  all  that  was  said  and  done  in  addition  to 
what  is  disclosed  by  the  minutes  of  the  board.1  A  gen- 
eral understanding  between  the  boards  of  two  corpora- 

§  197. 

2Baggot  v.  Turner,  21  Wash.  339;  58  Pac.  212. 
s  Baggot  v.  Turner,  supra. 

§  198. 

1  Sec.  30. 

2  Sec.  29. 

§   199. 

i  Tibbals  v.  Mount  Olympus  Water  Co.,  10  Wash.  329;  38  Pac.  1120; 
16  Wash.  480;  48  Pac.  236. 
11  D 


162  MEETINGS    AND    ELECTIONS 

tions,  with  reference  to  certain  transactions  between 
them,  followed  by  a  course  of  dealing  in  pursuance  there- 
of, of  which  each  board  has  knowledge,  is  sufficient  au- 
thority for  such  transactions,  although  no  resolutions 
granting  that  authority  are  passed  by  the  respective 
boards.2 

§  199. 

2  Roberts  v.  Washington  Nat'l  Bank,  11  Wash.  550;  40  Pac.  225;  Rob- 
erts v.  Washington  Water  Power  Co.,  19  Wash.  392;  53  Pac.  664,  as  to 
presumption  arising  from  minutes  of  meeting. 


CHAPTER  X. 

OFFICERS  AND  AGENTS  OF  CORPORATIONS. 

§  200.  Election,  appointment  and  qualification  of  officers. 

201.  Term  of  office — Removal  from  office. 

202.  Compensation  of  officers  and  agents. 

203.  Powers  of  officers. 

204.  Trustees. 

205.  President. 

206.  Vice-President. 

207.  Secretary. 

208.  Treasurer. 

209.  General  manager. 

210.     Liability  of  officers  for  mismanagement. 

Election,  appointment  and  qualification  of  officers  and  agents. 

§  200.  The  trustees  of  a  corporation,  except  in  the 
case  of  vacancies,  must  be  elected  by  the  stockholders. 
A.  vacancy  in  the  board  of  trustees,  except  when  caused 
by  the  removal  of  a  trustee,  must  be  filled  by  the  board 
of  trustees.  Other  officers  and  agents  of  the  corporation 
are  usually  elected  by  the  board  of  trustees  or  appointed 
by  the  managing  agents  of  the  corporation.  The  quali- 
fications of  trustees  have  been  heretofore  given.  The 
only  qualifications  for  officers  and  agents  of  the  corpora- 
tion are  those  provided  by  the  by-laws.  The  president 
is  usually  required  to  be  a  trustee,  and  in  case  he  is  not 
a  trustee,  while  he  may  preside  over  the  meetings  of  the 
board  of  trustees,  he  cannot  vote. 


164  OFFICERS    AND    AGENTS 

Term  of  office — Removal  from  office. 

§  201.  The  first  trustees  of  the  corporation  must  hold 
office  for  a  term  of  two  months,  and  cannot  hold  office 
for  a  term  exceeding  six  months.1  Trustees  once  elected 
hold  office  until  their  successors  are  elected  and  qualified.2 
The  statute  does  not  fix  the  term  of  office  of  the  trustees 
and  other  officers,  and  if  no  term  is  fixed,  the  trustees 
hold  office  at  the  will  of  the  stockholders,  and  the  other 
officers  at  the  will  of  the  board  of  trustees,  or  other  per- 
son or  persons  appointing  them.  An  officer  whose  term 
of  office  is  fixed  by  the  by-laws  of  the  corporation  cannot 
be  removed  without  cause. 

If  an  officer  or  agent  has  a  special  contract  for 
services  with  the  corporation  he  may  nevertheless  be 
removed,  but  the  corporation  may  render  itself  liable  in 
damages.  The  term  of  office  of  an  officer  or  agent  of 
the  corporation  need  not  be  limited  to  one  year  because 
the  trustees  are  elected  annually.  Officers,  once  elected, 
hold  office  until  their  successors  are  elected  and  qualified. 

Compensation  of  officers  and  agents. 

§  202.  Unless  the  by-laws  of  the  corporation  provide 
for  the  compensation  of  the  trustees  of  a  corporation,  the 
trustees  are  not  entitled  to  any  compensation  for  services 
within  the  line  of  their  duties  as  trustees,1  and  there  must 
be  some  other  authority  than  the  action  of  the  trustees 

§  201. 

1  Sec.  24. 

2  Sec.  30. 

§  202. 

i  Burns  v.  Commencement  Bay  Land  &  Imp.  Co.,  4  Wash.  558 ;  30 
Pac.  668,  709. 


OFFICERS    AND    AGENTS  165 

themselves  for  the  payment  of  such  compensation.2  If 
a  trustee  performs  duties  outside  of  and  in  addition  to 
his  duties  as  a  trustee,  it  is  competent  for  the  trustees 
to  pay  him  a  compensation  for  the  performance  of  those 
duties.3  The  compensation  of  other  officers  and  agents 
of  a  corporation  may  be  fixed  by  the  by-laws  of  the  cor- 
poration, but  is  usually  fixed  by  the  trustees  of  the  cor- 
poration, except  in  the  case  of  minor  officers  and  agents, 
the  compensation  of  which  officers  or  agents  is  usually 
fixed  by  their  superiors  in  office  or  some  managing  officer 
of  the  corporation. 

Powers  of  officers  generally. 

§  203.  The  by-laws  of  a  corporation  usually  outline 
the  duties  of  the  officers  of  the  corporation.  In  the  prac- 
tical working  of  a  corporation,  the  actual  powers  are 
usually  centered  in  one  or  more  officers,  and  in  order  to 
determine  whether  or  not,  in  a  given  case,  an  officer  had 
authority  to  do  an  act  it  is  necessary  to  look  carefully 
into  all  the  circumstances  of  the  case.  The  fact  that  an 
officer  exceeded  his  powers  as  defined  by  the  by-laws,  or 
performed  acts  not  formally  authorized  by  the  board  of 
trustees,  does  not  necessarily  prove  that  he  did  not  have 
the  power  to  perform  the  acts.1 

Trustees. 

§  204.     The  corporate  powers  are  exercised  by  the 

§  202. 

2  Burns  v.  Commencement  Bay  etc.  Co.,  supra. 

3  Burns  v.  Commencement  Bay  etc.  Co.,  supra. 
§  '203. 

i  Anderson  v.  Wallace  Lumber  &  Mnfg.  Co.,  30  Wash.  147;  70  Pac. 
247;  cited  iix  West  Seattle  Land  &  Imp.  Co.  v.  Novelty  Mill  Co.,  31  Wash. 
435;  72  Pac  71. 


OFFICERS    AND    AGENTS 

board  of  trustees.1  The  trustees  have  the  power  to  do 
what  is  necessary  or  proper  to  carry  out  the  express  or 
implied  objects  and  purposes  of  the  corporation.  The 
trustees  cannot  do  acts  not  within  the  express  or  im- 
plied objects  of  the  corporation,  as  set  out  in  the  articles 
of  incorporation,2  or  do  acts  within  the  objects  of  the 
corporation  as  set  out  in  its  articles  if  such  acts  are  not 
authorized  by  statute.3  A  board  of  trustees  has  capacity 
to  transact  the  corporate  business  when  it  has  been  rec- 
ognized by  the  corporation  and  the  public,  and  the  trus- 
tees are  at  least  de  facto  officers.4  Contracts  made  by 
a  trustee  of  a  corporation  may  be  enforced  by  it  in  its 
own  name.5 


President. 

§  205.  The  powers  of  the  president  of  the  corpora- 
tion are  fixed  by  the  by-laws  of  the  corporation  or  by 
the  custom  of  the  corporation.  Usually  the  president 
presides  at  all  meetings  of  the  stockholders  and  of  the 
board  of  trustees,  signs  all  contracts  and  other  documents 
of  the  •  corporation,  and  signs  the  stock  certificates  of 
the  corporation.  The  corporation  will  be  bound  by  the 
unauthorized  acts  of  the  president  when  it  has  knowledge 

§  204. 

iSec.  29. 

2  Parsons  v.  Tacoma  Smelting  Co.,  25  Wash.  492;  65  Pac.  765. 

3  Spokane  v.  Amsterdamsch  Trustees  etc.,  22  Wash.  172;  60  Pac.  141; 
Parsons  v.  Tacoma  Smelting  Co.,  supra. 

*  Spokane  v.  Amsterdamsch  Trustees  etc.,  supra. 
5  Moody  v.  Noyes,  15  Wash.  128;  45  Pac.  732. 


OFFICERS    AND    AGENTS 

of  similar  acts  and  frequently  ratifies  or  accepts  them,1 
but  the  corporation  will  not  be  bound  by  the  unauthorized 
acts  of  the  president,  although  the  president  has  fre- 
quently performed  similar  acts,  if  the  corporation  had 
no  knowledge  of  these  acts.2  The  fact  that  the  president 
of  a  corporation  acted  both  as  chairman  and  secretary 
of  a  meeting  of  the  board  of  trustees  will  not  of  itself 
invalidate  its  proceedings.3  A  mortgage  executed  by  one 
corporation  to  another  will  not  be  deemed  fraudulent 
solely  because  of  the  fact  that  the  same  individual  is 
president  of  both  corporations.4  A  corporation  cannot 
plead  want  of  authority  in  its  president  and  secretary 
to  enter  into  a  contract  where  it  has  received  the  bene- 
fits of  the  contract.5  Where  a  corporation  has  not  au- 
thorized the  rescission  of  a  contract  entered  into  by  its 
president  in  its  behalf,  such  president  has  no  authority 
to  rescind,  even  though  the  contract  may  have  been  made 
by  him  under  a  general  authority  to  enter  into  such 
contract  without  submitting  the  same  to  the  board  of 
trustees ;  and  especially  is  this  so  where  his  own  private 
interest  would  be  advanced  by  the  rescission  at  the  ex- 
pense of  his  principal.6 
§  205. 

1  Duggan  v.  Pacific  Boom  Co.,  6  Wash.  593;  34  Pac.  157;  36  Am.  St. 
182;  followed  in  Miller  v.  Wash.  So.  R.  Co.,  11  Wash.  414;  39  Pac.  673; 
this  case  questions  and  distinguishes  the  holding  in  Elwell  v.  Puget 
Sound  etc.  R.  Co.,  7  Wash.  487;  35  Pac.  376;  cited  in  Helena  Nat.  Bank 
v.  Rocky  Mt.  Tel.  Co.,  20  Mont.  379;  51  Pac.  833. 

2  Elwell  v.  Puget  Sound  etc.  R.  Co.,  supra. 

3  Budd  et  al.  v.  Walla  Walla  P.  &  P.  Co.,  2  Wash.  T.  347;  7  Pac.  896. 

4  Roy  &  Co.  v.  Scott,  Hartley  &  Co.,  11  Wash.  399;  39  Pac.  679. 

6  West  Seattle  Land  &  Imp.  Co.  v.  Novelty  Mill  Co.,  31  Wash.  435;  72 
Pac.  71. 

'«  Wallace  v.  Oceanic  Packing  Co.,  25  Wash.  143;  64  Pac.  938;  Duggan 
v.  Pacific  Boom  Co.,  supra. 

7  See  case  of  Seal  v.  Puget  Sound  etc.  Co.,  5  Wash.  422;  32  Pac.  214. 

8  See  cases  cited  under  Sees.  206  and  208. 


168    /  OFFICERS    AND    AGENTS 

Vice-President. 

fa  206.  The  powers  of  the  vice-president  are  fixed  by 
the  by-laws  of  the  corporation  or  the  custom  of  the  cor- 
poration. In  addition  to  his  other  duties,  it  is  usual  for 
the  vice  president  to  perform  the  duties  of  the  president 
in  the  absence  of  the  president  or  in  case  of  the  inability 
of  the  president  to  act.  Frequently  the  vice-president 
has  no  duties  other  than  to  act  in  case  of  the  absence  or 
inability  of  the  president.  The  acts  of  counsel  for  a  cor- 
poration appointed  by  a  vice-president  thereof  are  bind- 
ing on  a  corporation,  where  the  president  had  resigned 
and  left  the  country,  and  the  vice-president  was  the  act- 
ing president.1 

Secretary. 

§  207.  The  secretary's  duties  are  denned  by  the  by- 
laws or  the  practice  of  the  corporation.  The  secretary 
is  usually  made  the  custodian  of  the  corporation  seal, 
and  usually  affixes  the  seal  to  the  corporate  documents. 
He  usually  keeps  the  records  of  the  corporation  and  takes 
and  records  the  minutes  of  the  meetings  of  the  stock- 
holders and  of  the  board  of  trustees.  He  usually  signs  all 
legal  documents  of  the  company  and  the  stock  certificates 
of  the  company.  The  secretary  has  such  powers  as  the 
corporation  with  its  knowledge  allows  the  secretary  to 
exercise,  and  the  corporation  will  be  estopped  from  claim- 
ing that  the  secretary's  acts  are  unauthorized  when  it  has 
knowledge  of  frequent  similar  acts  and  has  ratified  or  ac- 

§  206. 

iFernald  v.  Spokane  &  B.  C.  Tel.  &  Tel.  Co.,  31  Wash.  672;  72  Pac. 
462. 


OFFICERS    AND    AGENTS 

cepted  them.1  Where  the  secretary  of  a  corporation,  in 
sole  charge  of  its  business,  makes  a  fraudulent  sale  of  its 
property,  and  the  corporation  made  no  move  to  disaffirm 
the  conveyance  for  two  years  after  the  discovery  of  the 
fraud,  it  was  held  estopped  to  deny  the  authority  of 
such  officer.2 

Treasurer. 

§  208.  The  treasurer's  powers  are  fixed  by  the  by- 
laws or  the  custom  of  the  corporation.  It  is  usually  the 
treasurer's  duties  to  receive  and  safely  keep  the  funds 
of  the  corporation  and  to  disburse  them  for  the  corpora- 
tion. The  cashiers  of  banks  or  trust  companies  usually 
have  greater  powers  than  the  treasurers  of  other  cor- 
porations, and  are  usually  considered  to  have  implied 
authority  to  do  all  acts  within  the  scope  of  the  business 
of  the  corporation. 

A  note  in  the  hands  of  a  third  party  which  was  made 
to  a  corporation,  indorsed  by  a  corporation  through  its 
treasurer,  is  sufficient  to  establish  prima  facie  that  such 
person  is  the  owner  and  holder  of  such  note.1 

General  manager. 

§  209.  The  powers  of  the  general  manager  are  fixed 
by  the  by-laws  or  the  custom  of  the  corporation.  The 
executive  head  of  a  corporation  and  the  manager  of  its 

§  207. 

i  Duggan  v.  Pacific  Boom  Co.,  6  Wash.  593;  34  Pac.  157;  36  Am.  St. 
182;  in  many  cases  the  authority  of  the  president  and  secretary  are 
construed  together.  See  cases  under  Sec.  204;  see,  also,  cases  under 
Sec.  208. 

2Coolidge  v.  Sobering,  32  Wash.  557;  73  Pac.  682. 
§  208. 

i  Brooks  v.  James,  16  Wash.  335 ;  47  Pac.  751. 


170  OFFICERS  AND  AGENTS 

affairs  may  be  the  president,  secretary,  or  other  officer, 
or  he  may  be  called  a  manager.  The  trustees  necessarily 
cannot  carry  out  the  details  of  the  business  of  a  corpora- 
tion and  these  are  usually  intrusted  to  some  managing 
officer  or  agent.  The  managing  officer  has  usually  ex- 
press or  implied  authority  to  do  everything  within  the 
ordinary  line  of  business  of  the  corporation,  but,  ordin- 
arily, he  would  have  no  power  to  bind  the  corporation 
in  matters  not  pertaining  to  the  ordinary  business  of  the 
corporation.  When  a  corporation  names  some  person 
as  its  manager,  and  allows  him  to  control  about  all  of 
its  business  transactions,  it  will  be  held  responsible  for 
the  acts  of  such  manager  in  the  name  of  the  corporation, 
until  it  has  been  affirmatively  shown  that  such  acts  were 
unauthorized.1  An  act  of  the  president  and  general  man- 
ager of  a  corporation,  not  authorized  by  the  board  of 
trustees,  is  valid  if  subsequently  ratified  by  all  the  stock- 
holders.2 One  seeking  to  enforce  the  liability  of  a  cor- 
poration on  a  contract  alleged  to  have  been  made  by  it 
should  not  be  non-suited  for  failure  to  show  that  the 
contract  was  authorized  by  the  corporation,  when  the 
evidence  shows  that  it  was  entered  into  on  behalf  of  the 
corporation  by  its  secretary  and  treasurer,  who  also  at 


§  209. 

1  Carrigan  v.  Port  Crescent  Improvement  Co.,  6  Wash.  590;   34  Pac. 
148;  cited  in  the  following  cases:     Miller  v.  Washington  So.  R.  Co.,  11 
Wash.  414;  39  Pac.  673;  Citizens  Nat.  Bank  v.  Winder,  14  Wash.  558; 
45  Pac.  38;  53  Am.  St.  890;  Saunders  v.  U.  S.  Marble  Co.,  25  Wash.  475; 
65  Pac.  782;  Anderson  v.  Wlallace  Lumber  etc.  Co.,  30  Wash.  147;   70 
Pac.  247;  West  Seattle  L.  &  I.  Co.  v.  Novelty  Mill  Co.,  31  Wash.  435;  72 
Pac.  71;  G.  V.  B.  Min.  Co.  v.  First  Nat.  Bank,  95  Fed.  30;  Cox  v.  Robin- 
son, 82  Fed.  284. 

2  Glover  v.  The  Rochester  German  Ins.  Co.,  11  Wash.  143;  39  Pac.  380. 


OFFICERS    AND    AGENTS 

the  time  occupied  the  position  of  general  and  financial 
manager  of  the  company,  and  was  entrusted  by  the  board 
of  trustees  with  the  general  management  of  its  affairs, 
since  the  relation  of  such  officer  to  the  corporation  and 
its  course  in  dealing  through  him  raised  a  question  for 
the  jury  to  determine  whether  or  not  he  was  authorized 
to  make  the  contract  in  controversy.3  A  promissory 
note  payable  to  a  corporation  in  the  hands  of  a  third 
person,  bearing  the  endorsement  of  the  corporation, 
signed  by  its  general  manager,  will  raise  the  presumption 
that  the  endorsement  was  made  with  authority  and  that 
the  holder  is  the  owner  of  the  note.4 

Liability  of  officers  for  mismanagement. 

§  210.  The  general  officers  of  a  corporation  who  di- 
rect its  business  cannot  use  the  corporate  name  and 
property  for  their  individual  enterprises,  and  avoid  ans- 
wering personally  to  the  creditors  of  the  corporation 
or  others  who  are  injured  by  their  misfeasance.1  Where 
the  property  of  a  corporation  is  being  mismanaged  and  is 
in  danger  of  being  lost  to  its  stockholders  through  the 
collusion  and  fraud  of  its  officers,  a  court  of  equity  can 
appoint  a  receiver  to  take  charge  of  the  property.2  A 
complaint  in  an  action  asking  a  personal  judgment 
against  a  director  and  officer  of  an  insolvent  corpora- 

§  209. 

3  Saunders  v.  U.  S.  Marble  Co.,  supra. 
<  Citizens  Nat'l  Bank  v.  Wintler,  supra. 
5  See  cases  under  Sees.  205  and  207. 

e  See  case  of  Rattelmiller  v.  Stone,  28  Wash.  104;  68  Pac.  168. 
§  '210. 

1  Morrison  v.  Blue  Star  Nav.  Co.,  26  Wash.  541;  67  Pac.  244. 

2  Cameron  v.  Groveland  Imp.  Co.,  20  Wash.  169;   54  Pac.  1128;   72 
Am.  St.  26. 


172  OFFICERS    AND    AGENTS 

tion,  on  the  ground  that  he  had  procured  a  fraudulent 
sale  on  execution  of  the  corporate  realty  to  himself  at 
a  grossly  inadequate  price,  does  not  state  facts  sufficient 
when  the  complaint  alleges  that  he  still  holds  the  prop- 
erty so  purchased  by  him  for  the  benefit  of  himself  and 
his  associates,  since  the  proper  remedy  in  such  cases, 
where  the  director  has  not  converted  the  corporate  prop- 
erty to  his  own  use  or  diverted  it  to  other  uses  than  the 
payment  of  corporate  debts,  would  be  an  action  to  set 
aside  the  transfer.3  In  an  action  by  one  stockholder  of 
a  corporation  against  another  the  complaint  is  good 
against  demurrer,  when  it  alleges  that  the  corporation 
was  indebted  to  the  plaintiff  in  amounts  aggregating 
seven  hundred  sixty-three  dollars  and  seventy-seven 
cents;  that  the  defendant  was  treasurer  of  the  corpora- 
tion, and  had,  in  collusion  with  its  other  officers,  sued 
the  corporation  and  obtained  judgment  by  default;  that 
an  execution  had  been  issued  and  the  real  estate  of  the 
corporation  was  about  to  be  sold  thereunder;  that  the 
defendant  as  treasurer,  had  five  hundred  dollars  in  money 
belonging  to  the  company  and  was  also  indebted  on  his 
stock  subscription  in  the  sum  of  seven  hundred  and  sixty- 
two  dollars  and  twenty-five  cents ;  that  he  had  refused  to 
render  any  account  to  the  stockholders,  as  treasurer,  of 
the  moneys  alleged  to  be  in  his  hands;  and  that,  if  al- 
lowed to  proceed  with  the  sale,  the  corporation  would 
be  rendered  insolvent  and  the  plaintiff's  debt  would  be 
lost,  as  well  as  his  interest  in  the  corporate  property 
sacrificed.4 

§  210. 

sPotvin  v.  Denny  Hotel  Co.,  26  Wash.  309;  66  Pac.  376. 

4  Cross  v.  Johnson,  20  Wash.  124;  54  Pac.  1000. 

5  See  case  of  First  Nat'l  Bank  of  Pullman  v.  Gaddis,  31  Wash.  596; 
72  Pac.  460. 


CHAPTER  XI. 

ACTIONS  BY  AND  AGAINST  CORPORATIONS. 

§  211.     Capacity  of  corporations  to  sue  and  liability  of  cor- 
porations to  be  sued. 

212.  Venue  of  actions  by  and  against  corporations. 

213.  Service  of  process  in  actions  against  corporations. 

214.  Pleadings  in  actions  by  or  against  corporations. 

215.  Special  proceedings  against  corporations. 

Capacity  of  corporations  to  sue  and  liability  of  corporations 
to  be  sued. 

§  211.  All  corpprations  have  the  right  to  sue  and 
may  be  sued,  in  all  courts,  in  like  cases  as  natural  per- 
sons,1 and  corporations  are  entitled,  to  the  same  extent 
as  natural  persons  to  remedies  provided  by  statute,  and 
the  same  remedies  may  be  used  against  corporations  as 
may  be  used  against  natural  persons.  A  corporation 
has  the  same  right  as  a  natural  person  to  confess  judg- 
ment, compromise  suits  or  submit  to  arbitration. 

Venue  of  actions  by  and  against  corporations. 

§  212.  An  action  by  a  corporation  must  conform  to 
the  same  rules  as  an  action  by  a  natural  person.  An 
action  against  a  corporation  may  be  brought  in  any 
county  where  the  corporation  has  an  office  for  the  trans- 
action of  business,  or  any  person  resides  upon  whom 
process  may  be  served  against  such  corporation,  unless 

§  211. 

1  Sec.  5. 

2  Sec.  28. 


174  CORPORATION  ACTIONS 

otherwise  provided  in  the  statute.1  A  judgment,  ren- 
dered against  a  corporation  in  another  county  than  one 
meeting  the  above  requirements,  is  void.2 

Service  of  process  in  actions  against  corporations. 

§  213.  The  statute  provides  a  method  of  serving  pro- 
cess upon  corporations.1  Service  of  process  issued  out 
of  the  superior  court  of  Clark  county  upon  a  purser  and 
a  wharfinger  in  the  employ  of  a  foreign  corporation  is 
sufficient,  where  the  company  was  operating  a  line  of 
steamers  on  the  Columbia  river,  which,  under  the  charge 
of  the  purser,  received  and  discharged  freight  and  pas- 
sengers at  Vancouver,  landing  regularly  at  the  wharf 
there  for  that  purpose,  and  hence  making  the  wharf  an 
office  in  this  state  for  the  transaction  of  business.2  Ser- 
vice on  a  domestic  corporation  by  service  on  an  agent 
in  charge  of  a  branch  store  is  not  sufficient  service,3  and 
notice  of  an  action  will  not  dispense  with  service  of  a 
summons.4  The  service  of  a  summons  upon  an  officer 
of  a  foreign  corporation  temporarily  within  the  state 
is  void.5  Service  upon  foreign  fraternal  insurance  com- 
panies is  made  by  service  upon  the  commissioner  of  in- 


§  212. 

*  i  Sec.  99. 
2  McMaster  v.  Advance  Thresher  Co.,  10  Wash.  147;  38  Pac.  760. 

§  213. 

1  Sees.  88,  89,  90,  91,  97,  98. 

2  Servers  v.  Dalles  etc.  Nav.  Co.,  24  Wash.  302;   64  Pac.  539;  fol.  In 
Vogel  v.  Same,  25  Wash.  672;  64  Pac.  539. 

3  Osborne  v.  Columbia  etc.  Corp.,  9  Wash.  66€;  38  Pac.  160. 

4  Osborne  v.  Columbia  etc.  Corp.,  supra. 

5  Carstens  et  al.  v.  Leidigh  etc.  Lumber  Co.,  18  Wash.  450;   51  Pac. 
1051;  63  Am.  St.  906;  39  L.  R.  A.  548. 


CORPORATION  ACTIONS 

surance.6  In  general,  service  upon  other  foreign  cor- 
porations is  made  by  service  upon  a  resident  agent.7  Ser- 
vice upon  a  president  of  a  bank  does  not  make  him  indi- 
vidually a  party  to  the  action.8 

Pleadings  in  actions  by  and  against  corporations. 

§  214.  The  general  rules  of  pleading  apply  as  well 
to  corporations.  In  an  action  by  or  against  a  corpora- 
tion, the  complaint  should  allege  corporate  existence.  If 
the  complaint,  in  an  action  against  a  corporation,  alleges 
the  corporate  existence  of  the  defendant  and  the  only 
answer  of  the  defendant  is  a  general  denial,  the  defend- 
ant cannot  complain  that  there  was  no  affirmative  proof 
of  its  corporate  existence.1  If  a  complaint  against  a 
corporation  does  not  allege  the  corporate  existence  of  the 
defendant,  objection  thereto  is  waived  by  defendant's 
plea  of  counter-claim  as  though  it  were  in  fact  a  corpora- 
tion.2 When  it  is  necessary  to  plead  the  articles  of  in- 
corporation, it  is  sufficient  to  state  them  in  substance.3 
A  general  demurrer  will  not  raise  the  question  of  failure 
to  allege  corporate  existence.4 

Special  proceedings — Quo  warranto. 

§  215.  Corporations,  with  respect  to  special  remedies 
provided  by  law,  have  the  same  rights  as  natural  persons. 

§  213. 

6  Sec.  97. 

1  Sees.  55,  97. 

8  State  ex  rel.  Boardman  v.  Ball,  5  Wash.  387;  31  Pac.  975;  34  Am.  St. 
866. 
§  214. 

1  Garneau  v.  Port  Blakeley  Mill  Co.,  8  Wash.  467;  36  Pac.  463. 

2  Frost  v.  Ainslie  Lumber  Co.,  3  Wash.  241;  28  Pac.  354,  915;  cited  in 
Sengfelder  v.  Mutual  Fire  Ins.  Co.,  5  Wash.  121;  31  Pac.  428. 

3  Seal  v.  Cameron,  24  Wash.  62;   63  Pac.  1103. 

4  Sly  v.  Palo  Alto  Gold  Mln.  Co.,  28  Wash.  485;  68  Pac.  871. 


176  CORPORATION  ACTIONS 

Special  proceedings,  in  our  statute,  however,  in  the  na- 
ture of  quo  warranto,  apply  only  to  public  or  private 
corporations  or  officers  or  persons  assuming  to  be  officers 
thereof.1  When  any  association  or  number  of  persons 
shall  act  within  this  state  as  a  corporation,  without  being 
legally  incorporated,  they  may  be  ousted  from  the  exer- 
cise of  these  powers  by  an  action  in  the  nature  of  quo 
warranto,2  or  if  any  corporation  does  or  omits  to  do 
what  amounts  to  a  surrender  or  forfeiture  of  its  rights 
and  privileges  as  a  corporation,  or  where  it  exercises 
powers  not  conferred  by  law,  it  may  be  ousted  from  the 
exercise  of  its  corporate  franchise  or  rights  by  such 
an  action.3  The  title  to  a  corporate  office  cannot  be  tried 
in  action  of  replevin  to  recover  the  personal  property  of 
the  corporation  fron  an  officer  in  possession  of  the  office 
and  performing  its  duties  under  a  bona  fide  claim  of 
right.4  The  stockholders  of  a  corporation  have  such 
an  interest  in  the  offices  as  will  warrant  them  in  pro- 
ceeding by  information  in  the  nature  of  quo  warranto 
for  the  purpose  of  ousting  those  illegally  holding  office.5 
Although  the  application  for  a  writ  of  mandamus  is  made 
in  the  interest  of  a  private  person,  it  is  proper  practice 
to  bring  the  proceeding  in  the  name  of  the  state,  on  re- 
lation of  the  person  financially  interested.6  It  is  the 
duty  of  the  prosecuting  attorney  to  institute  quo  war- 
ranto proceedings.7 

§  215. 

1  Sec.  92. 

2  Sec.  92. 

3  Sec.  92. 

4  Standard  Gold  Mining  Co.  v.  Byers,  31  Wash.  100. 

5  State  ex  rel.  Mitchell  v.  Horan,  22  Wash.  197;  60  Pac.  135. 

s  State  ex  rel.  Weinberg  v.  Pacific  Brewing  etc.  Co.,  21  Wash.  451;  58 
Pac.  584;  47  L.  R.  A.  248. 

7  State  v.  Seattle  Gas  etc.  Co.,  28  Wash.  488;  68  Pac.  946. 


CHAPTER  XH. 

LIABILITIES  OP  CORPORATIONS  FOR  TORTS 
AND  CRIMES. 

§  216.     Liability  of  a  corporation  for  its  torts. 
217.     Liability  of  a  corporation  for  its  crimes. 

Liability  of  a  corporation  for  its  torts. 

§  216.  A  corporation  is  liable  for  the  torts  of  its 
officers,  agents,  or  servants,  under  such  circumstances 
as  would  attach  liability  to  natural  persons.1  A  corpora- 
tion is  liable  for  the  wrongful  acts  or  omissions  of  its 
agents,  although  the  tort  involves  the  element  of  wrong- 
ful intent  or  the  element  of  malice.  The  rule  for  fixing 
compensatory  damages  for  the  torts  of  corporations  is 
the  same  as  for  natural  persons.  The  courts  do  not  agree 
as  to  the  liability  of  corporations  for  exemplary  damages. 
Our  court  has  refused  to  recognize  the  doctrine  of  ex- 
emplary or  punitive  damages,  and  has  condemned  the 
doctrine  in  the  strongest  terms.2  Where,  however,  ex- 
emplary damages  are  allowed  by  statute  they  may  be 
recovered.3  Damages  allowed  for  humiliation  and  dis- 

§  216. 

1  Jaggard  on  Torts,  page  167. 

2  Spokane  Truck  &  Dray  Co.  v.  Hoefer,  2  Wash.  45;  25  Pac.    72;  26 
Am.  St.  Rep.  842;  11  L.  R.  A.  689;  cited  in  Atrops  v.  Costello,  8  Wash. 
152;    35  Pac.   620;    distinguished  in   Sloan  v.   Langart,   6  Wash.   29; 
32  Pac.  1015,  and  Seattle  Crockery  Co.  v.  Haley,  6  Wash.  313;  32  Pac. 
650;  36  Am.  St.  Rep.  156;  approved  Levy  v.  Fleischner  etc.  Co.,  12  Wash. 
17;  40  Pac.  384. 

s  Sloan  v.  Langert,  supra;  Seattle  Crockery  Co.  v.  Haley,  supra. 
12  D 


178  CRIMES  OF  CORPORATIONS 

grace  are  items  of  compensatory  damages,  and  not  exem- 
plary or  puntitive  damages.4 

• 
Liability  of  a  corporation  for  its  crimes. 

§  217.  There  are  some  crimes  which  a  corporation, 
from  its  nature,  cannot  commit,  but,  as  a  general  rule,  a 
corporation  may  be  indicted  and  punished  by  a  fine  the 
same  as  a  natural  person.  The  constitution  forbids  cor- 
porations from  combining  to  fix  the  price  or  to  limit  or 
regulate  the  production  of  any  product  or  commodity.1 
The  legislature,  however,  has  not  passed  any  law  provid- 
ing penalties  for  the  violation  of  this  provision.  There 
are  several  statutory  provisions  making  certain  acts  or 
omissions  of  the  officers  and  agents  of  corporations  an 
offense  and  providing  penalties  therefor.2 

§  216. 

4  Wilson  v.  Northern  Pac.  Ry.  Co.,  5  Wash.  624;  32  Pac.  468;  34  Pac. 
146. 

§  217. 

1  Sec.  22. 

2  Sec.  41.    Prohibits  the  making  of  false  entries  in  the  corporation 
stock-book  or  the  omitting  of  proper  entries  therein,  or  the  refusal  or 
neglect  to  exhibit  books  when  required  by  law,  etc.      Sec.  81  is  an  act 
to  protect  the  stockholders  in  a  corporation,  or  the  persons  dealing  with 
a  corporation,  from  false  and  wilful  misrepresentation  made  by  the  of- 
ficers and  agents  of  a  corporation. 


CHAPTER  XIII. 

DISSOLUTION  OF  CORPORATIONS. 

§  218.     Dissolution  by  the  expiration  of  the  time  fixed  by 
its  articles. 

219.  Dissolution  by  complying  with  the  statutory  provis- 

ions for  the  dissolution  of  corporations. 

220.  Dissolution  because  of  a  forfeiture  of  its  rights  in 

a  proceeding  by  the  state  for  a  violation  of  law 
or  other  cause. 

Dissolution  by  the  expiration  of  time  fixed  by  the  articles  of 
incorporation. 

§  218.  A  corporation  cannot  have  perpetual  succes- 
sion in  this  state.  The  articles  of  incorporation  must 
fix  the  time  of  existence  of  the  corporation,  and  this  time 
must  not  exceed  fifty  years.1  At  the  expiration  of  the 
time  fixed  by  the  articles  the  corporation  is  dissolved  and 
ceases  to  exist. 

Dissolution  by  complying  with  the  statutory  provisions  for  the 
dissolution  of  corporations. 

§  219.  If  all  claims  against  a  corporation  have  been 
discharged,  it  may  be  dissolved  by  the  Superior  Court  of 
the  county  in  which  it  has  its  principal  place  of  business 
by  complying  with  the  provisions  of  our  statute  for  the 

§  218. 
i  Sec.  24. 


180  DISSOLUTION   OF  CORPORATIONS 

dissolution  of  corporations,1  but  if  the  object  of  the  dis- 
solution is  to  get  rid  of  the  holders  of  the  minority  of  the 
stock,  the  court  will  not  allow  the  corporation  to  be  dis- 
solved.2 

Dissolution  because  of  a  forfeiture  of  its  rights  in  a  proceeding 
by  the  state  for  a  violation  of  law  or  other  cause. 

§  220.  A  corporation  may  be  ousted  of  its  rights  in  a 
proceeding  by  the  state  when  it  does  or  omits  to  do  acts 
which  amount  to  a  surrender  or  forfeiture  of  its  rights 
and  privileges  as  a  corporation,  or  where  it  exercises 
powers  not  conferred  by  law.1  In  case  of  judgment 
against  the  corporation  in  such  proceeding,  the  court 
shall  restrain  the  corporation  and  appoint  a  receiver 
of  its  property  and  effects,  and  take  an  account  thereof, 
and  make  a  distribution  thereof  among  the  corporation's 
creditors.2  It  is  the  duty  of  the  prosecuting  attorney  to 
institute  proceedings  for  that  purpose.3  The  attorney 
general  has  no  authority  to  institute  such  a  proceeding.4 

§  219. 

i  Sec.  46. 

2Theis  v.  Spokane  Falls  Gas  Light  Co.,  33  Wash.  045;  74  Pac.  1004. 
§  220. 

1  Sec.  94. 

2  Sec.  95. 

3  Sec.  93. 

*  State  v.  Seattle  Gas  etc.  Co.,  28  Wash.  488;  68  Pac.  946. 

e  See  case  of  Ridpath  v.  San  Poll  etc.  Co.,  26  Wash.  427;  67  Pac.  229. 


CHAPTER  XIV. 

INSOLVENCY  OF  CORPORATIONS. 

§  221.     What  facts  constitute  insolvency. 

222.  Powers  of  insolvent  corporations. 

223.  Rights  of  creditors  of  insolvent  corporations. 

What  facts  constitute  insolvency. 

§  221.  When  a  corporation  has  reached  a  point  where 
its  debts  are  equal  to  or  greater  than  its  property  and  it 
cannot  pay  in  the  ordinary  course,  and  its  business  is  no 
longer  profitable,  it  ought  to  be  wound  up  and  its  assets 
distributed.1  A  corporation  was  held  to  be  insolvent  al- 
though its  assets,  by  computing  its  book  accounts  and  bills 
receivable  at  their  face  value,  exceeded  its  liabilities,  the 
court  saying  that  every  business  man  knows  that  such  a 
computation  falls  far  short  of  representing  the  actual 
value  of  the  assets  of  a  mercantile  establishment.2 
Where  the  total  indebtedness  of  a  corporation  does 
not  exceed  two-thirds  of  its  assets  at  a  conserva- 
tive valuation  and  the  corporation  is  doing  busi- 
ness with  its  affairs  in  as  good  condition  as  at  any 
time  during  its  existence  and  with  every  indication 
of  their  continuing  in  the  same  condition,  it  is  not 
insolvent.3  Although  a  corporation  is  embarrassed  to 
some  extent  and  has  not  money  on  hand  to  pay  all  of  its 


§  221. 

i  Thompson  v.  Huron  Lumber  Co.,  4  Wash.  600;  30  Pac.  741;  31  Pac.  25. 
'2Conover  v.  Hull,  10  Wash.  673;  39  Pac.  16fi;  45  Am.  St.  810. 
3  Strohl  v.  Seattle  Nat'l  Bank,  25  Wash.  28;  64  Pac.  916. 


182  INSOLVENCY  OF  CORPORATIONS 

indebtedness,  but  its  business  is  regarded  as  profitable, 
and  the  evident  purpose  of  the  corporation  is  to  continue 
it,  the  court  will  riot  be  warranted  in  finding  that  it  is 
insolvent.4  When  a  corporation  is  conducting  a  profitable 
business  the  fact  that  its  indebtedness  exceeds  its  assets 
does  not  make  it  insolvent.5  The  action  of  the  trial  court 
in  appointing  a  receiver  for  a  corporation  upon  the  appli- 
cation of  a  creditor  will  not  be  disturbed  on  appeal  on  a 
showing  made  that  the  corporation  had  been  conducting 
a  telephone  business  which  it  had  recently  abandoned 
upon  a  transfer  of  its  franchises  and  business  to  another 
company;  that  it  was  allowing  its  entire  tangible  prop- 
erty, consisting  of  wires,  poles  and  telephone  instruments,- 
to  go  to  ruin,  without  any  effort  to  care  therefor;  and 
that  the  board  of  trustees  cannot  agree  upon  the  manage- 
ment of  its  affairs,  and  that  the  company  must  continue 
without  official  management,  unless  a  receiver  be  appoint- 
ed.6 In  an  action  against  a  corporation  for  the  appoint- 
ment of  a  receiver  and  the  recovery  of  shares  of  stock, 
testimony  as  to  the  fact  that  no  books  of  account  were 
kept  by  the  corporation  is  admissible.7 

§  221. 

<  Leslie  v.  Wilshire,  6  Wash.  282;  33  Pac:  505. 

5  Brooks  v.  Skookum  Mnfg.  Co.,  9  Wash.  80;  37  Pac.  284. 

e  Fernald  v.  Spokane  &  B.  C.  Tel.  Co.,  31  Wash.  672;  72  Pac.  412. 

7  Jones  v.  Western  Mnfg.  Co.,  27  Wash.  136;  67  Pac.  586. 

s  A  bank  would  be  presumed  to  know  that  a  corporation  is  insolvent 
when  it  accepts  whiskey  in  payment  of  a  note  due  it  from  a  liquor 
company.  Carroll  v.  Pacific  Nat'l  Bank,  19  Wash.  639;  54  Pac.  32. 

9  See  case  of  Roberts  v.  Washington  Nat'l  Bank,  9  Wash.  12;    37 
Pac.  26. 

10  See  case  of  State  ex  rel.  Jenkins  v.  Equitable  Endemnity  etc. 
Assoc.,  18  Wash.  514;  52  Pac.  234,  where  the  court  held  domestic  in- 
surance corporation  insolvent. 


Powers  of  insolvent  corporations. 

§  222.  A  corporation  is  not  dissolved  when  it  becomes 
insolvent.  It  still  has  power  to  carry  on  its  business  until 
restrained  from  so  doing  by  an  order  of  a  court  of  com- 
petent jurisdiction.  The  capital  of  the  corporation  being 
a  trust  fund,  the  corporation  must  not  do  anything  to 
jeopardize  the  rights  of  its  creditors.  Many  cases  have 
arisen  in  our  own  courts  where  the  powers  of  an  insolvent 
corporation  have  been  passed  on  and  defined.  An  in- 
solvent bank  may,  in  consideration  of  a  loan  to  it  by  an- 
other bank  of  ready  money  with  which  to  meet  demands 
upon  it,  transfer  part  of  its  property  as  security  therefor, 
without  rendering  the  transaction  invalid  as  to  creditors.1 
An  insolvent  corporation  can  make  a  common  law  assign- 
ment of  all  its  property  for  the  benefit  of  its  creditors,2 
but  the  deed  of  assignment  of  an  insolvent  corporation 
can  be  set  aside  by  the  court  on  the  appointment  of  a 
receiver.3  An  insolvent  corporation  may  transfer  all  of 
its  property  to  the  mortgagee  thereof,  if  such  transfer  is 
made  in  good  faith.4  An  insolvent  corporation  may  make 
a  valid  sale  of  its  property.5  A  mortgage  given  by  a 
corporation  which  is  heavily  indebted,  in  order  to  put 


§  222. 

i  Roberts  v.  Washington  etc.  Bank,  11  Wash.  550;  40  Pac.  225. 

2Nyman  v.  Berry,  3  Wash.  734;  29  Pac.  557;  cited  in  McKay  v.  El- 
wood,  12  Wash.  583;  41  Pac.  919;  Cerf  etc.  Co.  v.  Wallace,  14  Wash.  253; 
44  Pac.  264;  Oleson  v.  Bank  of  Tacoma,  15  Wash.  150;  45  Pac.  734; 
Thompson  v.  Huron  Lumber  Co.,  4  Wash.  604;  30  Pac.  741;  31  Pac.  25. 

3  Oleson  v.  Bank  of  Tacoma,  supra;  quoted  in  New  York  Nat'l  Exch. 
Bank  v.  Metropolitan  Bank,  28  Wash.  562;  68  Pac.  905. 

4  Klosterman  v.  Mason  County  etc.  R.  R.  Co.,  8  Wash.  281;  36  Pac.  136. 
BKlosterman  v.  Mason  County  etc.  R.  R.  Co.,  supra;  Mayer  v.  Wool- 

ery,  10  Wash.  354;  39  Pac.  135. 


184  INSOLVENCY  OF  CORPORATIONS 

itself  in  better  shape  to  continue  business,  is  a  valid  mort- 
gage.6 A  mortgage  given  by  an  insolvent  corporation  to 
one  of  its  creditors  who  has  knowledge  of  its  insolvency 
is  voidable  as  to  its  prior  or  subsequent  creditors.7  Art 
insolvent  corporation  cannot  make  a  confession  of  judg- 
ment amounting  to  a  preference.8  An  insolvent  corpora- 
tion cannot  make  a  voluntary  preference  among  its  credi- 
tors.9 A  corporation  cannot  give  a  valid  chattel  mortgage 
for  the  purpose  of  preferring  the  mortgagee  over  other 
creditors.10  A  corporation  cannot  take  advantage  of  an 
insolvent  law,  unless  it  is  specially  included  in  such  law.11 
An  insolvent  corporation  cannot  give  a  mortgage  to  secure 
an  antecedent  loan,  although  there  was  an  agreement  at 
the  time  the  loan  was  given  that  if  the  loan  was  not  paid 
a  mortgage  would  be  given.12 

Rights  of  creditors  of  insolvent  corporations. 

§  223.    The  rights  of  creditors  of  insolvent  corpora- 

§  222. 

6  Vincent  v.  Snoqualmie  Mill  Co.,  7  Wash.  566;  35  Pac.  396. 

7  Cook  v.  Moody,  18  Wash.  114;  50  Pac.  1020;  63  Am.  St.  872. 

8  Conover  v.  Hull,  10  Wash.  673;  39  Pac.  166;  45  Am.  St.  810;  cited  in 
Biddle  Pur.  Co.  v.  Port  Townsend  Steel  etc.  Co.,  16  Wash.  681;  48  Pac. 
407;  Burrell  v.  Bennett,  20  Wash.  647;  56  Pac.  375;  State  ex  rel.  Strohl 
v.  Superior  Court,  20  Wash.  551;  56  Pac.  35;  45  L.  R.  A.  177. 

9  Thompson  v.  Huron  Lumber  Co.,  4  Wash.  600;  30  Pac.  741;  31  Pae. 
25;  cited  in  Conover  v.  Hull,  supra;  Allen  v.  Stallcup,  13  Wash.  632; 
43  Pac.  884;  Compton  v.  Schwabacher  Bros.,  15  Wash.  306;  46  Pac.  338; 
Biddle  Pur.  Co.  v.  Port  Townsend  Steel  Co.,  supra;  State  ex  rel.  Strohl 
v.  Superior  Court,  supra;  Potvin  v.  Denny  Hotel  Co.,  26  Wash.  315;  66 
Pac.  376;  Ames  v.  Heslet,  19  Mont.  188;  47  Pac.  806;  Ingwersen  v.  Edge- 
combe,  42  Neb.  740;  60  N.  W.  1033. 

10  Van  Brocklin  v.  Queen  City  Printing  Co.,  19  Wash.  552;  53  Pac.  822. 

11  Nyman  v.  Berry,  supra;  see  McKay  v.  Elwood,  supra. 

12  Biddle  Pub.  Co.  y.  Port  Townsend  Steel  Co.,  supra. 


tions  are  based  upon  the  theory  that  the  assets  of  the  cor- 
poration are  a  trust  fund,  and  being  a  trust  fund,  the 
courts  will  not  permit  one  creditor  -to  do  any  act  that 
will  prejudice  the  rights  of  any  other  creditor,  and  it  has 
been  frequently  held  that  the  creditors  must  share  equally 
in  such  fund.1  The  statute  authorizes  the  appointment  of 
a  receiver  when  the  corporation  has  been  dissolved  or  is  in 
imminent  danger  of  insolvency.2  A  receiver  will  be  ap- 
pointed for  an  insolvent  corporation  upon  the  petition 
of  a  creditor.3  The  Federal  Bankruptcy  Act  of  1898  did 
not  suspend  the  right  of  a  state  court  to  appoint  a  re- 
ceiver, but  our  state  court  retains  jurisdiction  over  such 
corporations  until  they  are  adjudged  bankrupt  under  the 
law  of  Congress  by  the  proper  tribunal.4  A  preference 
made  by  an  insolvent  corporation  among  its  creditors 
will  be  set  aside  by  the  court.5  A  creditor  for  whose 

§  223. 

1  Thompson  v.  Huron  Lumber  Co.,  4  Wash.  600;  30  Pac.  741;  31  Pac. 
25;  Holbrook  etc.  Co.  v.  Peters  etc.  Co.,  8  Wash.  344;  36  Pac.  256;  quoted 
in  Nat'l  Wallpaper  Co.  v.  Columbia  Nat'l  Bk.   (Neb.),  93  N.  W.  1005; 
Compton  v.  Schwabacher,  15  Wash.  306;   46  Pac.  338;   cited  in  Wash- 
ington Liquor  Co.  v.  Alladio  Cafe  Co.,  28  Wash.  176;  68  Pac.  444;  State 
ex  rel.  Strohl  v.  Superior  Court,  20  Wash.  545;  56  Pac.  35;  45  L.  R.  A. 
177;  Biddle  Pub.  Co.  v.  Port  Townsend  Steel  Co.,  16  Wash.  681;  48  Pac. 
407;  cited  in  State  ex  rel.  Strohl  v.  Superior  Court,  supra;   Coler  v. 
Allen,  114  Fed.  611;  Conover  v.  Hull,  10  Wash.  673;   39  Pac.  166;  45 
Am.  St.  810;  Burrell  v.  Bennett,  20  Wash.  647;  56  Pac.  375;  Adamant 
Mfg.  Co.  v.  Wallace,  16  Wash.  614;   48  Pac.  415;   cited  in  Dunlap  v. 
Rauch,  24  Wash.  624;  64  Pac.  807. 

2  Sec.  100. 

3  See  citations  note  1;  N.  Y.  Nat'l  Exch.  Bank  v.  Met.  Bank,  28  Wash. 
553;  68  Pac.  905. 

4  State  ex  rel.  Strohl  v.  Superior  Court,  supra. 

5- Thompson  v.  Huron  Lumber  Co.,  supra;  Compton  v.  Schwabacher, 
supra;  Conover  v.  Hull,  supra;  Biddle  Pub.  Co.  v.  Port  Townsend  Steel 
Co.,  supra;  Van  Brocklin  v.  Queen  City  Printing  Co.,  19  Wash.  552; 
53  Pac.  822. 


186  INSOLVENCY  OF  CORPORATIONS 

benefit  a  corporation  has  made  an  illegal  preference  may 
share  in  the  funds  on  the  same  basis  as  other  creditors.6 
Where  the  notes  of  an  insolvent  corporation  are  given  to  a 
stockholder  in  consideration  of  the  purchase  of  his  stock, 
not  for  the  benefit  of  the  corporation  but  for  that  of  a 
third  person,  such  stockholder  is  not  entitled  to  share  in 
the  assets  of  the  corporation  until  after  the  claims  of  all 
other  creditors,  except  those  of  stockholders  having  shares 
of  stock,  have  been  satisfied.7  Where  a  receiver  of  an 
insolvent  lumber  manufacturing  corporation  was  ap- 
pointed, with  directions  to  continue  the  business,  and  it 
was  made  a  condition  of  his  appointment  that  all  claims 
for  labor  incurred  by  the  corporation  within  ten  months 
prior  to  the  beginning  of  the  suit  in  which  the  receiver 
was  appointed  should  be  paid  in  full  out  of  the  assets 
and  earnings  of  the  plant,  one  who  was  engaged  prior  to 
such  appointment,  in  getting  out  logs  for  the  corpora- 
tion, and  who,  after  such  appointment,  paid  off  his  labor 
claims  on  the  advice  of  the  court  that  they  were  preferred 
claims  and  came  within  the  terms  of  the  order  directing 
the  receiver  to  pay  such  in  full  and  that  it  would  be 
unnecessary  for  him  to  file  lien  claims  against  the  logs, 
is  entitled  to  have  the  amount  paid  by  him  in  satisfaction 
of  the  labor  claims  of  his  employes  as  a  preferred  claim 
against  the  receiver.8  A  receiver  has  the  rights  of  the 
creditors  at  whose  instance  he  was  appointed,  and  may 
enforce  stock  subscriptions  although  the  corporation  it- 
self might  not  be  authorized  to  sue  on  the  subscriptions.9 
The  receiver  of  a  foreign  national  bank  cannot  be  re- 

§  223. 

6  Thompson  v.  Huron  Lumber  Co.,  supra. 

7  Van  Brocklin  v.  Queen  City  Printing  Co.,  supra. 

8  Davis  v.  Foster,  29  Wash.  363;  69  Pac.  1102. 

9  Cole  v.  Satsop  R.  R.  Co.,  9  Wash.  487;  37  Pac.  700;  43  Am.  St.  858. 


INSOLVENCY  OF  CORPORATIONS  1Q7 

quired  to  pay  a  state  tax  on  the  shares  of  stockholders 
out  of  the  assets  of  the  bank  to  the  detriment  of  the  bank's 
creditors.10  A  creditor  of  a  corporation  in  the  hands  of  a 
receiver  may  sue  the  corporation  on  a  note  executed  be- 
fore the  receiver  was  appointed.11  A  transfer  of  prop- 
erty by  an  insolvent  corporation  to  prefer  a  creditor  will 
not  afford  ground  of  attachment  by  another  creditor.12 
The  fact  that  a  creditor  is  a  stockholder  and  director  in 
an  insolvent  corporation  does  not  estop  him  from  par- 
ticipating in  the  funds  of  the  corporation.13  An  attach- 
ment levied  upon  the  property  of  an  insolvent  corporation 
by  a  creditor  having  knowledge  of  its  condition  will  be  set 
aside,  although  insolvency  proceedings  have  not  been 
instituted  against  the  corporation.14  Where  the  bond- 
holders of  an  insolvent  corporation  are  identical  with  its 
original  stockholders,  the  lien  of  the  mortgage  securing 
the  bonds  will  be  postponed  in  favor  of  the  creditors  of 
the  corporation.15  A  judgment  creditor  of  an  insolvent 
corporation  may  enforce  unpaid  stock  subscriptions  by 
an  action,  although  no  prior  call  has  been  made  for  the 
payment  of  the  sum  subscribed.16  A  creditor  who  holds 
a  judgment  lien  upon  the  real  property  of  a  corporation 
cannot  complain  of  a  fraudulent  conveyance  of  the 
premises  to  an  officer  thereof,  since  it  is  necessarily  made 
subject  to  his  lien,  which  remains  unimpaired  even  though 

§  223. 

10  Baker  v.  King  County,  17  Wash.  622;  50  Pac.  481. 

11  Allen  v.  Olympia  Light  &  Power  Co.,  13  Wash.  307;  43  Pac.  55. 

12  Holbrook  etc.  Co.  v.  Peters  etc.  Co.,  supra. 
.     is  Thompson  v.  Huron  Lumber  Co.,  supra. 

i*Compton  v.  Schwabacher,  supra. 

is  Manhattan  Trust  Co.  v.  Seattle  Coal  etc.  Co.,  16  Wash.  499;  48  Pac. 
333,  737. 
is  Adamant  Mnfg.  Co.  v.  Wallace,  supra. 


188  INSOLVENCY  OP  CORPORATIONS 

the  transfer  is  fraudulent  as  to  other  creditors.17  Fraud 
in  the  valuation  of  property  transferred  to  a  corporation 
in  consideration  of  an  issuance  of  corporate  bonds  cannot 
be  taken  advantage  of  by  a  creditor,  when  the  transaction 
took  place  prior  to  the  time  that  his  cause  of  action 
arose.18  Where  the  personal  property  of  an  insolvent  cor- 
poration has  been  transferred  to  a  director  for  the  pur- 
pose of  placing  it  beyond  the  reach  of  creditors,  a  judg- 
ment creditor  is  entitled  to  recover  its  value  from  the 
grantee.19  The  subsequent  insolvency  of  a  corporation 
cannot  be  given  in  evidence  for  the  purpose  of  affecting 
the  validity  of  a  prior  instrument,  which  was  valid  at  the 
time  of  its  execution.20  Where  general  creditors  have 
for  more  than  a  year  acquiesced  in  an  order  of  the  court 
discharging  a  receiver  and  permitting  an  alleged  insolvent 
bank  to  resume  business,  they  cannot  be  heard  to  object 
that  the  receiver  did  not  represent  them  at  the  hearing.21 
The  double  liability  of  stockholders  of  a  banking  corpora- 
tion is  a  secondary  liability,  and  the  assets  of  the  corpora- 
tion must  be  exhausted  before  the  superadded  liability 
can  be  enforced  against  the  stockholders.22  When  a  bank 
is  in  the  hands  of  a  receiver,  the  superadded  liability 
can  be  reached  only  by  a  suit  by  the  receiver.23  Where 


§  223. 

17  Potvin  v.  Denny  Hotel  Co.,  26  Wash.  309 ;  66  Pac.  376. 

is  Sligh  v.  Shelton  Southeastern  R.  R.  Co.,  20  Wash.  16;  54  Pac.  763. 

is  Potvin  v.  Denny  Hotel  Co.,  supra. 

20  Bank  of  California  v.  Puget  Sound  etc.  Co.,  20  Wash.  637;  56  Pac. 
395. 

;2i  Bank  of  California  v.  Puget  Sound  etc.  Co.,  supra. 

22  Wilson  v.  Book,  13  Wash.  676;  43  Pac.  939. 

23Watterson  v.  Masterson,  15  Wash.  511;  46  Pac.  1041;  Wilson  v. 
Book,  supra. 


INSOLVENCY  OF  CORPORATIONS 

the  stock  was  for  the  benefit  of  the  community  estate 
the  super  added  liability  can  be  enforced  against  the 
community  property  of  the  husband  and  wife.24  One 
who  was  not  a  stockholder  in  a  banking  corporation  at 
the  time  an  indebtedness  was  incurred  or  created  cannot 
be  subjected  to  the  statutory  liability  of  stockholders.25 

§  223. 

24  Shuey  v.  Adair,  24  Wash.  378;  64  Pac.  536. 

25  Shuey  v.  Holmes,  21  Wash.  223;  57  Pac.  818. 


CHAPTER  XV. 

FOREIGN  CORPORATIONS. 

§  224.     Rights  and  powers  of  foreign  corporations. 

225.  Statutory  requirements  for  foreign  corporations. 

226.  Effect  of  failure  to  comply  with  statutory  require- 

ments. 

Rights  and  powers  of  foreign  corporations. 

§  224.  Corporations  organized  under  any  state  or  ter- 
ritory of  the  United  States  or  of  any  foreign  country, 
state  or  colony,  if  organized  for  purposes  for  which  do- 
mestic corporations  can  be  organized  in  this  state,  upon 
compliance  with  the  laws  governing  foreign  corporations, 
have  the  same  rights  and  powers  as  domestic  corpora- 
tions.1 No  corporation  organized  outside  the  limits  of 
this  state  shall  be  allowed  to  transact  business  within 
this  state  on  more  favorable  terms  than  are  prescribed  by 
law  for  similar  corporations  organized  under  the  laws 
of  this  state.2  A  foreign  corporation,  upon  compliance 
with,  our  laws,  becomes  a  resident  of  the  state,  and  to  such 
intents  and  purposes,  a  domestic  corporation.3  The  same 
prohibition  as  to  the  right  to  acquire  lands  applies  to 
foreign  corporations,  a  majority  of  whose  stock  is  held 
by  aliens,  unless  these  aliens  have  declared  their  intention 

§  224. 

1  Sec.  53. 

2  Sees.  7,  53. 

s  Dittenhoef er  et  al  v.  Coeur  d'Alene  Clothing  Co.,  4  Wash.  519 ;  30 
Pac.  660. 


FOREIGN  CORPORATIONS 

to  become  citizens  of  the  United  States,  as  apply  to  alien 
natural  persons,4  nor  can  a  foreign  corporation  deal  in 
real  estate  or  carry  on  a  brokerage  business  therein  in 
this  state.5  Foreign  corporations  organized  prior  to  1890 
do  not  fall  within  the  provisions  of  that  act  prohibiting 
the  business  of  buying  and  selling  land.6  A  foreign  cor- 
poration is  subject  to  garnishment,7  but  a  garnishment  in 
a  foreign  state  by  a  citizen  of  this  state  is  a  good  defense 
to  the  action.8  Since  the  act  of  British  Columbia  authoriz- 
ing foreign  corporations  to  do  business  in  that  province 
contains  no  express  declaration  that  such  corporations, 
on  complying  with  the  act,  shall  become  domestic  corpora- 
tions, the  effect  of  the  act  is  merely  to  license  foreign  cor- 
porations to  do  business  in  the  province,  and  not  to  make 
them  domestic  corporations.9  The  fact  that  a  fishing  com- 
pany had  its  real  and  active  place  of  business  outside  of 
the  state  during  certain  seasons  of  the  year,  would  not 
make  it  a  non-resident,  where  it  had  otherwise  fully  com- 
plied with  the  requirements  of  our  corporation  laws,  nor 
would  such  fact  justify  the  seizure  of  its  fishing  site  by  a 
stranger.10 

Statutory  requirements  for  foreign  corporations. 

§  225.    A  foreign  corporation,  doing  business  in  this 
state,  must  cause  to  be  filed  and  recorded  in  the  office  of 

§  224. 

4  Sees.  96,  63. 

6  Sec.  55. 

e  Realty  Co.  v.  Appolonia,  5  Wash.  437;  32  Pac.  219. 

7  Dittenhoefer  et  al.  v.  Coeur  d'AIene  Clothing  Co.,  supra. 
•sNeufelder  v.  German  American  Ins.  Co.,  «  Wash.  336;  33  Pac.  870; 

36  Am.  St.  166;  22  L.  R.  A.  287. 

9  Daniel  v.  Gold  Hill  Mining  Co.,  28  Wash.  411;  68  Pac.  884. 

10  Hastings  v.  Anacortes  Packing  Co.,  29  Wash.  224;  69  Pac.  776. 


192  FOREIGN  CORPORATIONS 

the  Secretary  of  State  a  certified  copy  of  its  charter, 
articles  of  incorporation,  memorandum  of  association  or 
certificate  of  incorporation  certified  by  the  officer  who  is 
the  custodian  of  the  same,1  and  shall  appoint  a  resident 
agent,  in  writing,  upon  whom  service  of  process  may  be 
made,  and  file  such  appointment  in  the  office  of  the  Secre- 
tary of  State.  When  the  corporation  changes  its  agent 
or  place  of  business,  it  must  file  a  new  appointment,  stat- 
ing the  change  of  such  agent  or  place  of  business.2 

Effect  of  failure  to  comply  with  statutory  requirements. 

§  226.  Although  it  is  the  duty  of  foreign  corporations 
to  comply  with  the  statutory  regulations  before  doing 
business  in  this  state,1  they  frequently  attempt  to  do 
business  without  such  compliance.  The  failure  of  a  for- 
eign corporation  to  comply  with  these  requirements  does 
not  invalidate  its  acts,2  and  a  contract  with  it  cannot  be 
repudiated  because  it  has  not  complied  with  the  laws 
relative  to  foreign  corporations.3  A  foreign  corporation 
is  entitled  to  the  benefit  of  the  mechanic's  lien  law,  al- 
though it  has  not  complied  with  the  laws  of  this  state 

§  225. 

1  See  Sec.  54  for  requirements  in  full. 

2  See  Sec.  55  for  requirements  in  full. 

§  226. 

1  See  Sees.  53,  54  and  55,  where  requirements  are  set  out  fully. 

2  Dearborn  Foundry  Co.  v.  Augustine,  5  Wash.  67;  31  Pac.  327;  Say- 
ward  v.  Gardner,  5  Wash.  247;  31  Pac.  761;  33  Pac.  389;  Huttig  Bros. 
Mfg.  Co.  v.  Denny  Hotel  Co.,  6  Wash.  122;  32  Pac.  1073;  Edison  Co.  v. 
Nav.  Co.,  8  Wash.  370;  36  Pac.  260;  40  Am.  St.  910;  24  L.  R.  A  315; 
Whitman  Agricultural  Co.  v.  Strand,  8  Wash.  647;  36  Pac.  682. 

3  Whitman  Agricultural  Co.  v.  Strand,  supra;  La  France  etc.  Co.  v. 
Town  of  Mount  Vernon,  9  Wash.  142;  37  Pac.  287;  38  Pac.  80;  43  Am. 
St.  827;  Rathbone  v.  Frost,  9  Wash.  162;  37  Pac.  298. 


FOREIGN  CORPORATIONS 

relative  to  the  appointment  of  an  agent.4  A  foreign  cor- 
poration can  sue  in  the  courts  of  this  state  without  having 
complied  with  the  laws  of  this  state  relative  to  the  ap- 
pointment of  an  agent.5  The  penalty  for  a  failure  to  com- 
ply with  the  statute  is  a  fine  of  two  hundred  fifty  dollars,6 
and  the  statutory  penalty  or  fine  is  the  only  penalty  for 
non-compliance  with  the  law.7  The  purchase  of  a  note 
and  mortgage  by  a  foreign  corporation  with  no  intention 
of  doing  any  other  act  here  is  not  a  transaction  of  busi- 
ness within  the  meaning  of  the  statute.8 

§  226. 

4  Dearborn  Foundry  Co.  v.  Augustine,  supra;  Huttig  Bros.  Mfg.  Co. 
v.  Denny  Hotel  Co.,  supra. 

5  Marble  etc.  Bank  v.  Williams,  23  Wash.  766;  63  Pac.  511;  La  France 
Fire  Engine  Co.  v.  Town  of  Mount  Vernon,  supra;  Dearborn  Foundry 
Co.  v.  Augustine,  supra. 

«Keene  Guarantee  Savings  Bank  v.  Lawrence,  32  Wash.  572;  73  Pac. 
680. 

7  Sec.  56. 

s  La  France  Fire  Engine  Co.  v.  Town  of  Mount  Vernon,  supra. 

13  D 


INDEX  TO  PART  II 


(References  are  to  sections.) 

A 
Acknowledgment, 

Form  of  corporate,  140. 

Notary  public  who  is  an  officer  of  corporation  can  take  ac- 
knowledgement of  instrument  to  corporation,  140. 

Actions  against  corporations, 

Service  of  process  in,  213. 
Actions  by  and  against  corporations, 

Pleadings  in,  214. 

Acts  of  corporation, 

Can  do  such  as  are  incidental  to  and  in  aid  of  its  principal 
business,  144. 

Administrator, 

When  holding  stock  can  vote  at  stockholders'  meetings,  186. 
Agents  of  corporation, 

Acts  and  omissions  of,  when  made  statutory  offenses,  217. 

Compensation  of,  how  and  by  whom  fixed,  202. 

Corporation  changing,  must  file  a  new  appointment  of,  225. 

Corporation  may  appoint  and  remove,  126. 

Foreign  corporation  may  sue  in  this  state  when  no  appoint- 
ment of,  226. 

Liability  of  corporation  for  torts  of,  216. 

Powers  of  generally,  203. 

Service  of  process  on  foreign  corporation,  made  on  resident, 
213. 

Special  contract  of,  200. 


196  INDEX  TO  PART  II 

Stockholder  dealing  with,  presumed  to  know  scope  of  au- 
thority of,  131. 
Term  of  office  of,  200. 

Agreement  of  corporation, 

Not  to  engage  in  certain  business  not  binding  on  individual 
members,  131. 

Aliens, 

Corporation  with  majority  of,  can  only  acquire  lands  when, 
125. 

Alien  stockholders, 

Conveyance  of  real  estate  to,  may  be  avoided  by  state,  164. 

Articles  of  incorporation,  107. 

Amendments  to,  114. 

Amount  of  capital  stock  should  be  stated  in,  159. 

Certified  copy  of  foreign  corporation,  with  whom  filed,  225. 

Certified  copy  prima  facie  evidence  of  incorporation,  116. 

Dissolution  of  corporations  fixed  by,  218. 

Objects  of  corporation  must  be  set  out  in,  144. 

Place  of  business  fixed  by,  143. 

Prima  facie  evidence  of  incorporation  when  certified  by  sec- 
retary of  state,  117. 

Shares  of  capital  stock,  must  state  number  of,  160. 

Stock  in  another  corporation,  cannot  give  power  to  purchase, 
137. 

Stock  issued  in  excess  of  amount  fixed  by,  void,  163. 

Time  of  existence  of  corporation  fixed  by,  218. 

Trustees,  permissible  acts  of,  set  out  in,  204. 

"When  necessary  to  plead,  substance  only  need  be  stated,  214. 

Assessments, 

Due  and  unpaid  when  transfer  made,  must  be  paid  by  trans- 
ferrer,  173. 


INDEX  TO  PART  II 


197 
) 


Assignor  of  stock, 
"When  not  a  stockholder,  166. 

Attachment  bond, 

Principal  and  sureties  on,  estopped  to  deny  corporate  exist- 
ence, 130. 

Attachment, 

Property  of  insolvent  corporation  by  creditors,  when  will  be 

set  aside,  223. 
Transfer  of  property  by  insolvent  corporation,  when  will  not 

afford  ground  of,  223. 

Attorney  general, 

Not  proper  officer  to  institute  proceedings  against  corpora- 
tion for  violation  of  law,  220. 

Auditor  of  county, 

Articles  of  incorporation  must  be  filed  with,  107. 
Certificate  of  incorporation  to  be  filed  with,  on  removal  by 
corporation  of  principal  place  of  business,  143. 

B 

Banking  corporation, 

Capital  stock,  amount  necessary  to  be  subscribed  before  it 

can  do  business,  142. 

Capital  stock,  must  have  at  least  $25,000,  159. 
Cashier,  powers  of,  208. 
Double  liability  of  stockholders,  when,  223. 
Double  liability,  proceeds  from,  how  applied,  223. 
Liability  of  stockholders,  170. 
Shares  must  be  of  the  face  value  of  $100,  160. 
Statutory  liability,  when  stockholder  cannot  be  subjected  to, 

223. 
Superadded  liability  of,  reached  only  by  receiver,  223. 


198  INDEX  TO  PART  II 

Bona  fide  purchaser, 

Note  of  corporation  given  without  consideration,  valid  in 
hands  of,  135. 

Bond  in  attachment, 

Principal  and  sureties  on,  estopped  to  deny  corporate  exist- 
ence, 130. 

Books  and  records, 

Remedy  for  refusal  of  right  to  inspect,  168. 
Stockholders'  right  to  inspect,  168. 

Borrow  money, 

Corporation  can,  or  issue  notes,  for  authorized  purpose,  134. 
Corporation  cannot  borrow  for  unauthorized  purpose,  135. 

Building  and  loan  associations, 

Capital,  must  have  $2,000,000  authorized,  159. 

Business, 

Kinds  of  that  can  be  carried  on,  144. 
Principal  place  of,  112. 

By-laws  of  corporations, 

Agents,  provide  qualifications  for,  200. 

Articles  of  incorporation  must  not  be  inconsistent  with,  127. 

Capital  stock,  manner  of  transfer  of  certificates  of,  provided 

by,  172. 

Compensation  of  officers  and  agents  fixed  by,  202. 
Corporation  has  power  to  make,  127. 
Cumulative  voting,  can  provide  for,  188. 
Duties  of  officers  should  be  defined  by,  126. 
Non-usage,  may  be  abrogated  by,  127. 
Notice  unnecessary,  when  meetings  of  corporation  fixed  by, 

183. 
Officers,  names  and  titles  of,  fixed  by,  198. 

Provide  qualification  of,  200. 

Powers  of,  should  be  fixed  by,  126. 


INDEX  TO  PART  II 


199 


Removal  of,  should  be  provided  for  by,  126. 

State  of  Washington,  must  not  be  inconsistent  with  constitu- 
tion or  laws  of,  127. 

Stockholders  adopt,  unless  articles  of  incorporation  confer 
power  on  trustees,  127. 

Stockholder,  may  limit  to  single  vote,  188. 

Trustees'  meetings,  by-laws  providing  for  notice  of  special 
meetings  of,  must  be  followed,  193. 

United  States,  must  not  be  inconsistent  with  constitution  and 

laws  of,  127. 

c 

Capital, 

Objects  of  incorporation  to  obtain,  110. 
Capital  stock, 
Amount  of,  110. 
How  arrived  at,  159. 
Stated  in  articles  of  incorporation,  159. 
Necessary  to  be  subscribed  before  corporation  can  com- 
mence business,  142. 
Bank  or  trust  company,  face  value  of  shares  must  be  $100, 

160. 

Banking  corporation,  amount  necessary  for,  before  commenc- 
ing business,  142. 
Must  have  at  least  $25,000,  159. 

Building  and  loan  association  must  have  an  authorized  capi- 
tal of  $2,000,000,  159. 

Corporation  cannot  subscribe  for  its  own,  151. 
Decrease  of,  cannot  be  effected  by  misuse  of  corporate  assets, 

161. 

Education,  corporation  organized  for,  does  not  need  any,  159. . 
Increase  or  decrease  of,  how  effected,  161. 
Over-issued,  shares  of,  by  proper  officer,  bona  fide  holder  may 
sue  corporation,  163. 
Void  even  in  hands  of  bona  fide  purchaser,  163. 


200  INDEX  TO  PART  II 

Pledger  of,  shares  of,  still  stockholder  and  entitled  to  vote, 

166. 
Shares  of,  110. 

Face  value  of,  how  determined,  160. 

Number  and  face  value  of,  160. 

Personal  property  and  transferable,  171. 

Transferable  in  manner  provided  by  by-laws,  172. 

Transferred  but  not  registered,  not  liable  on  execution, 
166. 

Social  objects,  corporation  organized  for,  does  not  need  any, 

159. 

Stockholder  cannot  transfer  or  dispose  of  shares  of,  when, 
162. 

May  vote  if  stock  transferred  and  unregistered,  166. 

Transferring,  rights  of,  when  unregistered,  166. 
Subscriber  to,  when  not  stockholder,  166. 
Transfer  of  shares  of,  effect  of,  173. 

Valid  only  when  entered  upon  books  of  corporation,  172. 
Trust  company  must  have  $25,000  or  more,  according  to 

population,  159. 

Trust  fund  for  benefit  of  creditors,  162. 
Unpaid  subscriptions  to  are  assets  of  corporation,  162. 
Washington  corporation  cannot  subscribe  for  stock  in  another 

corporation,  151. 
Who  can  subscribe  for,  151. 
When  question  of  non-compliance  with  statutory  provisions 

for  subscriptions  to  capital  stock  cannot  be  raised,  142. 

Cashier, 

Bank  or  trust  company,  powers  of,  208. 

Casualty, 

Avoidance  of,  by  incorporation,  103. 

Certificate  of  incorporation, 

Certified  copy  of  foreign  corporattion,  with  whom  filed,  225. 


INDEX  TO  PART  II 


201 


On  removal  of  principal  place  of  business,  must  be  filed  with 
county  auditor,  143. 

Certificates  of  stock, 
Should  be  authenticated  by  seal,  121. 
Usually  signed  by  president  and  secretary,  205,  207. 

Charter, 

Certified  copy  of  foreign  corporation,  should  be  filed  with 

secretary  of  state,  225. 
Corporation  may  forfeit,  by  ultra  vires  act,  147. 

Charitable  objects, 

Corporation  organized  for,  does  not  need  any  capital  stock, 
159. 

Collateral, 

Corporation  can  take  its  own  stock  as,  138. 

Corporation  can  take  stock  of  another  corporation  as,  137. 

Combinations, 

Constitution  of  State  of  Washington  prohibits  certain,  217. 

Community  estate, 

When  stock  is  for  the  benefit  of,  superadded  liability  can  be 
enforced  against  community  property,  223. 

Compensation  of  agents, 

By-laws  may  fix,  202. 

Minor  officers  and  agents,  usually  fixed  by  whom,  202. 

Compensatory  damages, 
Rule  for  fixing  as  to  corporations,  216. 

Conditional  subscriptions, 
See  stock  subscriptions,  155. 


202  INDEX  TO  PART  II 

Contract, 

Corporation  can  enter  into  with  stockholder,  131. 

Valid,  with  trustees  and  officers,  when,  132. 

Can  enter  into  one  of  guaranty  when  benefits  direct,  136. 

Cannot  enter  into  one  of  guaranty  and  suretyship,  when, 
136. 

Cannot  retain  benefits  of,  when  in  violation  of  trust  rela- 
tion, 130. 

May  make,  129. 

Receiving  benefit  estopped  to  deny  validity  of,  148. 

Stockholders,  prior  to  incorporation,  139. 
Form  of  acknowledgment  of  corporation,  140. 
In  violation  of  law,  133. 
Place  of,  141. 
Eight  to  make,  129. 

(Of)  trustees  can  be  enforced  in  name  of  corporation,  204. 
Sale  of  shares  of  stock,  179. 
With  strangers,  130. 

Co-operation, 

Corporations  result  of,  101. 

Corporate  existence, 

Allegation  of,  complaint    must  contain,  214. 

Failure  to  allege  not  raised  by  general  demurrer,  214. 

Corporate  funds, 
Stock  cannot  be  purchased  from  stockholder  with,  162. 

Corporate  name,  107,  108. 
May  sue  and  be  sued  in,  118. 

Corporations, 

Arbitration,  right  to  submit  to,  211. 
Business,  right  to  manage  its,  128. 
Capacity  to  sue  and  be  sued,  211. 
Crimes,  liability  of  for,  217. 


INDEX  TO  PART  II 


203 


Defacto,  cannot  be  inquired  into  collaterally,  116. 

How  may  be  proved,  116. 
De  jure,  115. 

Judgment,  right  to  confess,  211. 
Liability  to  be  sued,  211. 
Method  of  creation,  107. 

Parol  evidence  may  be  used  in  proving  defacto,  116. 
Regulations,  has  power  to  make,  128. 
Suits,  right  to  compromise,  211. 
Time  of  existence,  111. 

Creditors  of  insolvent  corporations, 

Attachment  by,  upon  property  of  insolvent  corporation,  when 
will  be  set  aside,  223. 

Corporation  cannot  enter  into  contract  of  guaranty  or  surety- 
ship, when,  136. 

Non-consenting,  not  bound  by  unauthorized  indebtedness, 
135. 
When  stockholder  and  directors,  rights  of,  223. 

Crimes, 
Liability  of  corporation  for  its  own,  217. 

Cumulative  voting, 
By-laws  of  corporation  may  provide  for,  188. 

D 

Damages,  compensatory, 

Rule  fixing  as  to  corporations,  216. 

Damages. 
Exemplary,  216. 
Punitive,  216. 

Death, 

Object  of  incorporation  not  defeated  by  death  of  individual 
members,  103. 


204  INDEX  TO  PART  II 

Directors, 
Eights  of,  when  creditor  and  stockholder,  223. 

Directors  and  officers, 

Extent  of  trust  relation,  132. 

Dissolution  of  corporation, 

By  expiration  of  time,  218. 

Minority  stockholder,  when  can  successfully  resist,  219. 

Statutory  provisions,  compliance  with  works,  219. 

Dividends, 

Right  to,  how  fixed,  175. 

Transfer  of  stock,  when  do  not  pass  with,  175. 

When  pass  with,  175. 
Trustees,  right  of,  to  declare,  169. 
Stockholders,  right  to,  169. 

Domestic  corporations,  116. 

Service  on  agent,  when  insufficient,  213. 

E 

Educational  objects, 

Corporation  organized  for,  does  not  need  any  capital  stock, 
159. 

Election  of  trustees  of  corporation,  188. 
Election  of  officers  of  corporation,  200. 

Execution. 

Stock  transferred,  but  not  registered,  not  liable  on,  166. 

Executor, 

When  holding  stock  as,  can  vote  at  stockholders'  meetings, 
186. 

Exemplary  damages,  216. 
Expedition  of  business,  105. 


INDEX  TO  PART  II  205 

F 

Federal  bankruptcy  act  of  1898, 

Receiver,  effect  of  act  in  regard  to  state  appointment  of,  223. 
Foreign  corporation, 

Articles  of  incorporation  prima  facie  evidence,  when  certi- 
fied by  secretary  of  state,  117. 

Brokerage  business  in  real  estate,  right  to  carry  on,  224. 

Garnishment,  subject  to,  224. 

Incorporation,  what  constitutes  proof  of,  117. 

Prima  facie  proof  of,  117. 

Real  estate,  right  to  deal  in,  224. 

Real  estate,  right  to  hold,  224. 

Rights  and  powers  of,  224. 

Service  of  process  generally,  made  on  resident  agent  of,  213. 
On  officer,  when  void,  213. 

Statutory  requirements  for,  225. 
Form  of  acknowledgment  of  corporation,  140. 
Franchises, 

Corporation  can  sell  or  assign,  125. 

Cannot  sell  or  assign,  free  from  liabilities  of,  125. 
Fraternal  insurance  company, 

Service  of  process,  how  made  on,  213. 
Fraud  in  valuation  of  property, 

When  cannot  be  taken  advantage  of,  223. 
Fraudulent  acts, 

Of  secretary  estop  corporation  unless  promptly  disaffirmed, 

207. 
Fraudulent  conveyance, 

Judgment  creditor,  when  cannot  complain  of,  223. 

G 

Garnishment, 

Foreign  corporation,  subject  to,  224. 
In  foreign  state,  defense  to  action,  224. 


206  INDEX  TO  PART  II 

General  manager, 

Acts  of  (unauthorized),  when  valid,  209. 
Powers  of,  how  fixed,  209. 

Guarantor, 

Corporation  may  become,  when,  136. 
Corporation  cannot  become,  when,  136. 

Guardian, 

Can  vote  at  stockholders'  meeting  when  holding  stock  as,, 
186. 

Incorporation, 

Admitted  by  defendant  company  filing  answer,  116. 

Advantages  of,  101,  102,  103,  104,  105. 

Articles  of,  107. 

Co-operation  one  of  the  advantages  of,  101. 

Objects  of,  101,  102,  103,  104, 105,  109. 

Parol  evidence,  may  be  shown  by,  116. 

Sufficient,  if  unobjected  to,  116. 
What  constitutes  proof  of,  as  to  foreign  corporations,  117. 

I 

Insolvency, 

Facts  constituting,  221. 

Individual,  does  not  defeat  object  of  incorporation,  103. 
Subsequent,  when  cannot  be  given  in  evidence,  223. 

Insolvent  corporation, 

Attachment  upon  property  of,  by  creditors,  when  will  be  set 
aside,  223. 

Creditors  of,  when  favored  over  bondholders  and  original 
stockholders,  223. 
Eights  of,  223. 

Judgment  creditor,  when  may  enforce  unpaid  stock  sub- 
scriptions, 223. 

Personal  property,  judgment  creditor  entitled  to  recover, 
when,  223. 


INDEX  TO  PART  II  207 

Powers  of,  222. 

Preferences  made  by,  will  be  set  aside,  223. 

Transfer  of  property  by,  when  will  not  afford  ground  of 

attachment,  223. 
Installments, 

Due  and  unpaid,  when  transfer  made,  must  be  paid  by  trans- 

ferrer,  173. 
Inspection  of  books  and  records, 

Enforcement  of  right  of,  by  stockholder,  168. 

Stockholder's  right  to,  168. 

L 

Laches, 

Stockholder  to  obtain  relief  from  ultra  vires  act,  must  avoid, 

149. 
Legislature, 

Power  to  create  .corporations  belongs  to,  106. 
Liability, 

Avoided  by  incorporation,  104. 

Of  officers,  210. 

Of  partnership,  104. 

M 

Majority, 

Rule  of,  102. 

Necessary  for  a  quorum  of  trustees,  197. 
Mandamus,  writ  of, 

By  whom  brought,  215. 

Stockholder  may  apply  for,  when,  215. 

Stockholder  may  enforce  right  to  inspect  books  by,  168. 
Meetings  of  stockholders, 

Informality  or  want  of  notice,  will  not  invalidate,  when,  182. 

Notice  of  special  meetings,  193. 

•Notice  of,  when  necessary,  192. 

Time  and  place  of,  185. 

Quorum,  187. 


208  INDEX  TO  PART  II 

Mining  corporation, 

Stock  subscription  may  be  represented  by  interest  or  share 
in  mining  claim,  156. 

Mismanagement, 

Liability  of  officers  for,  210. 

Mortgage  by  corporation, 

Stockholders   acquiescing   in   execution   of   estopped   from 

setting  up  invalidity,  130. 

Corporation  can  borrow  money  and  secure  same  by,  134. 
Purchase  of  by  foreign  corporation,  when  not  transaction 

of  business  within  meaning  of  statute,  226. 

N 
Name  of  corporation,  107,  108. 

Non-usage, 
By-law  may  be  abrogated  by,  127. 

Notary  public, 

Officer  of  corporation  can  take  acknowledgment  of  corpora- 
tion instrument,  140. 

Notes, 

Corporation  can  borrow  money  and  issue,  134. 

Notice, 

Stockholders'  regular  meeting,  183. 

Stockholders'  special  meeting,  184. 

Stockholders'  meetings,  informality  of,  will  not  invalidate, 

when,  182. 

Trustees'  first  meeting,  191. 
Trustees'  regular  meeting,  192. 
Trustees'  special  meeting,  193. 
Trustees'  meeting,  informality  of,  will  not  invalidate,  when, 

190. 
Proof  of,  need  not  appear  on  minutes,  184. 


INDEX  TO  PART  II  209 

o 

Offenses, 

Officers  and  agents  of  corporations,  when  acts  and  omissions 
made,  217. 

Office  in  corporation, 

Eeplevin,  cannot  be  tried  in  action  of,  215. 
Officers  of  corporation, 

Actions  and  omissions  of,  when  made  statutory  offenses,  217. 

Appointment  of,  200. 

By-laws  should  define  duties  of,  126. 

Compensation,  how  fixed,  202. 

Corporation  can  enter  into  valid  contract  with,  132. 

May  appoint  and  remove,  126. 
Duties  of,  by-laws  should  define,  126. 
Elected  by  whom  and  when,  198. 
Election  of,  200. 

Foreign  corporation,  service  on,  when  void,  213. 
Liability  of,  for  mismanagement,  210. 
Liability  of  corporation  for  torts,  216. 
Notary  public  can  take  acknowledgment  of  instrument  to 

corporation,  when,  40. 
Powers,  by-laws  should  fix,  126. 

Of  generally,  203. 
Qualifications  of,  200. 
Eemovable,  how,  200. 

For  cause  only,  201. 

Removal,  by-laws  should  provide  for,  126. 
Service  on  as  officer,  does  not  make  him  party  to  action,  213. 
Special  contract  of,  200. 
Term  of  office  of,  200. 
Trustees  usually  fix  compensation  of,  126. 
Vacancies,  how  filled,  198. 

14  D 


210  INDEX  TO  PART  II 

Officers  and  directors, 

Trust  relation,  extent  of,  132. 

P 

Parol  evidence, 

Corporate  existence,  not  the  best  evidence  of,  116. 
Corporation  defacto  may  be   proved  by,  116. 
Incorporation  may  be  shown  by,  116. 

Partnership  liability,  104. 

Penalties, 

Statutory  provisions  for  certain  acts  and  omissions,  217. 

Perpetual  succession, 

Corporation  cannot  have  in  this  state,  218. 

Personal  property, 

Corporation  may  acquire,  for  what  purpose,  125. 

Place  of  business, 

Articles  of  incorporation  fix,  143. 

Certificate  of  incorporation  must  be  filed  on  removal  of  prin- 
cipal place  of  business,  143. 

Corporation  changing,  must  file  a  new  appointment,  225. 

Notice  of  removal  of  principal,  published  when  and  where, 
143. 

Principal,  112. 

Pleadings  in  actions  by  and  against  corporations,  214. 

Pledge  of  shares  of  stock, 

How  may  be  made,  180. 

Rights  and  interests  of  parties  to,  181. 

Pledger  of  stock, 

May  vote  at  stockholders '  meetings,  186. 
Rights  and  interests  of,  181. 
Stockholder  and  voter,  166. 


INDEX  TO  PART  II 


211 


Powers  of  corporations, 

Requisites  to  exercise  of,  143. 
When  can  be  exercised,  142. 
Where  can  be  exercised,  143. 

President  of  corporation, 

Acts  of,  when  binding  upon  corporation,  205. 

When  not  binding  upon  corporation,  205. 
Corporation  bound  when  long  acquiescing  in  acts  of  secre- 
tary, and,  130. 
Powers  of,  205. 
Qualifications  of,  200. 

Process,  service  of, 

In  actions  against  corporations,  213. 

Property  of  corporations, 

Entire  property    can  only  be  sold  or  leased,  when,  125. 
Unanimous  vote  required  to  sell  or  lease  entire,  125. 

Prosecuting  attorney, 

Quo  warranto  proceedings,  duty  to  institute,  215. 

Duty  to  institute  proceedings  against  corporation,  when,  220. 

Punitive  damages,  216. 

Q 

Quorum  of  stockholders, 
By-laws  governing,  effect  of,  187. 
Statute  does  not  fix,  187. 

Quorum  of  trustees, 
What  constitutes,  197. 

Quo  Warranto,  215. 

State  may  proceed  against  corporation  for  ultra  vires  by,  147. 
Stockholders  may  proceed  by,  against  persons  holding  office 
illegally,  215. 


212  INDEX  TO  PART  II 

R 

Real  estate, 
Alien  stockholders,  conveyance  of  real  estate,  avoided  by 

state,  164. 
Corporation  may  acquire,  for  what  purpose,  125. 

Receiver  of  foreign  national  bank, 

When  not  required  to  pay  state  tax  on  shares  of  stockhold- 
ers, 223. 

Receiver  of  insolvent  corporation, 

Appointment  of,  when  will  not  be  disturbed,  221. 
When  may  be  made,  115. 
When  can  be  made,  210. 
Bank  in  hands  of,  superadded  liability  only  reached  by  suit, 

223. 

Creditor,  appointed  upon  petition  of,  223. 
Creditors,  general,  when  cannot  object  to  order  of  court  dis- 
charging, 223. 

Right  to  ask  for  appointment  of,  when,  223. 
Of  corporation,  when  may  sue,  223. 
Federal  bankruptcy  act  of  1898,  effect  of,  in  regard  to  state 

appointment  of,  223. 
Judgment  against  corporation,  court  shall  appoint  in  case  of, 

220. 

Of  ouster,  appointed  after,  115. 
Preferred  claims  against,  223. 
Statute  authorizes  appointment,  when,  223. 
Stock  subscription,  may  bring  suit  to  enforce,  158. 

When  may  enforce,  223. 
Violation  of  law,  court  can  appoint  for,  220. 
Record  of  stockholders'  meetings,  189. 
Records  and  books, 

Remedy  for  refusal  of  right  to  inspect,  168. 
Stockholders'  right  to  inspect,  168. 


INDEX  TO  PART  II  213 

Registration  of  stock  transfers, 

Statutory  provisions  requiring,  176. 
Regular  and  fixed  meetings  of  corporation, 

Notice  not  necessary  when  fixed  by  by-law,  183. 
Regulations, 

By  whom  made,  128. 

Corporations  have  power  to  make,  128. 

How  made,  128. 

Purpose  of,  128. 
Replevin,  action  of, 

Title  to  corporate  office  cannot  be  tried  in,  215. 
Resident  agent, 

Service  of  process  upon,  212. 

On  foreign  corporations,  generally  made  on,  213. 

s 

Seal, 

By  whom  affixed,  122. 

Corporation  may  make  and  use  a  common,  119. 
Effect  of  affixing,  123. 
Failure  to  affix,  124. 
Form  of,  120. 
Use  of,  121. 

Secretary  of  corporation, 

Acts  of,  unauthorized,  when  corporation  estopped  to  deny, 
207. 

Corporation  bound,  when  long  acquiescing  in  acts  of  presi- 
dent and,  130. 

Duties  of,  207. 

Fraudulent  acts  of,  unless  promptly  disaffirmed,  estop  cor- 
poration, 207. 

Secretary  of  state, 
Appointment  of  resident  agent  must  be  filed  with,  223. 


214  INDEX  TO  PART  II 

Articles  must  be  filed  with,  107. 

Certificate  of  articles  of  incorporation  by,  prima  facie  evi- 
dence of  foreign  corporation,  116,  117. 

Resident  agent  of  foreign  corporation,  appointment  of,  must 
be  filed  with,  225. 

Servants, 

Liability  of  corporations  for  torts  of,  216. 

Service  of  process, 

(On)  agents  of  domestic  corporation,  when  insufiicient,  213. 
Foreign  corporation,  made  on  resident  agent,  213. 
Fraternal  Insurance  Companies,  how  made,  213. 
Officer  of  foreign  corporation,  when  void  on,  213. 
Resident  agent,  212. 

Shares  of  stock, 

Certificates  of  should  be  authenticated  by  seal,  121. 

Collateral,  may  be  taken  as,  in  another  corporation,  137. 

Contract  may  be  made  for  sale  of,  179. 

Corporation  cannot  purchase  or  hold  its  own  or  hold  in  an- 
other, 164. 

Foreign  corporation,  when  presumed  to  have  power  to  pur- 
chase its  own  stock,  137. 

Pledge  of  effect  of  a,  181. 

Pledge  of,  how  may  be  made,  180. 

Remedy  for  refusal  of  corporation  to  transfer,  168. 

Right  to  pledge,  180. 

Transferrable  in  manner  provided  by  by-law,  172. 

"When  corporation  can  take  its  own  or  shares  of  other,  138. 

Social  objects, 

Corporation  organized  for  does  not  need  any  capital  stock, 
159. 

Special  proceedings,  215. 


INDEX  TO  PART  II 


215 


Statutory  requirements, 
Failure  to  comply  with,  115. 

Failure  of  foreign  corporation  to  comply  with,  effect  of,  227. 
Penalty  for  non-compliance  with  by  foreign  corporation,  226. 

Stockholders, 

Action  of,  may  be  brought  against  another,  210. 

Alien,  conveyance  of  real  estate  to,  avoided  by  state,  164. 

Bank,  liability  of,  in,  170,  223. 

By-laws  adopted  by,  unless  articles  of  incorporation  confer 
power  on  trustees,  127. 

Capital  stock  shares  of,  transferred,  but  unregistered,  not 
liable  on  execution,  166. 

Capital  stock,  shares  of,  when  not  subscribed  to,  166. 

Corporation  can  enter  into  contract  with,  131. 

Dividends,  right  to,  169. 

Dealing  with  agent,  presumed  to  know  scope   of  agent's 
powers,  131. 

How  to  become  a,  165. 

Liability  of,  104,  170. 

Minority  of,  when  can  successfully  resist  dissolution,  219. 

Mortgage,  acquiescing  in  execution  of,  estopped  from  setting 
up  invalidity,  130. 

Non-consenting,  not  bound  by  unauthorized  indebtedness, 
135. 

Non-consenting,  not  bound  by  ultra  vires  contracts,  149. 

Person  who  has  assigned  and  sold  his  stock  is  not,  166. 

Quorum  of,  not  fixed  by  statute,  187. 

Quo  warranto  proceedings  may  be  brought  by,  against  per- 
sons holding  office  illegally,  215. 

Resident  of  state,  at  least  one  must  be,  164. 
•  Eights  of,  cannot  be  contravened  by  by-laws. 

Rights  of,  When  creditor  and  director,  223. 

Statutory  liability  (bank)  when  cannot  be  subjected  to,  223. 

Subscriber  to  capital  stock,  when  not,  166. 


216  INDEX  TO  PART  II. 

Transfer  of  stock  in  good  faith  good  against  creditors  even 

if  not  registered,  174. 
Trust  company,  liability  of,  in,  170. 
Trustees,  two-thirds  vote  of,  necessary  to  remove,  126. 
Trustees,  when  can  set  aside  vote  of,  132. 
Trustees,  when  can  question  validity  of,  197. 
Vote,  although  stock  pledged  may,  166. 
Vote  of,  how  determined,  188. 
Vote  of,  two-thirds,  means  two-thirds  of  stock,  126. 
Who  are,  166. 
Who  can  be,  164. 

Stockholders'  meetings, 

Administrator  or  executor  holding  stock  may  vote  at,  186. 

Guardian  holding  stock  may  vote  at,  186. 

Informality  or  want  of  notice  will  not  invalidate  when,  182. 

Minutes  of,  best  evidence,  189. 

Notice,  must  be  held  at  time  and  place  stated  in,  185. 

Notice,  when  not  necessary,  182. 

Place  must  be  reasonably  convenient,  185. 

Pledgor  of  stock  may  vote  at,  186. 

Record  of,  may  be  proved  by  parol,  189. 

State,  must  be  within,  185. 

Time  must  be  reasonable,  185. 

Trustee  holding  stock  may  vote,  186. 

Unrecorded  stock,  when  holder  of  cannot  vote,  186. 

Voters  at,  qualifications  of,  186. 

Stock  subscriptions, 

Actual  and  face  value  of,  156. 

Articles  of  incorporation  cannot  give  power  to  make  in  an- 
other corporation,  137. 

By-laws,  when  should  be  pleaded  in  suit  to  recover  on,  158. 
Conditional,  can  only  be  made  at  time  of  organization,  155. 
Conditional,  to  depend  upon  what,  155. 


INDEX  TO  PART  II.  217 

Consideration  for,  154. 

Corporate  funds,   cannot  be   purchased  from  stockholders 

with,  162. 

Corporation  cannot  make  in  another  corporation,  137. 
Form  of,  153. 

Joint,  by  trustee,  enforceable  contract,  153. 
Judgment  creditor,  when  may  enforce  unpaid,  228. 
Liability  against  subscriber  in  favor  of  creditor,  fair  rule 

as  to,  156. 

Liability  of  subscriber,  when  cannot  escape,  157. 
Manner  of  enforcing,  158. 

May  be  legal  when  there  has  been  no  formal  subscription,  153. 
Mining  corporation,  may  be  represented  by  an  interest  in 

mining  claim,  156. 

Notes  given  in  payment  for,  when  enforceable,  154. 
Over-valuation  of  property  in  payment  of,  held  fraudulent, 

156. 

Payment  of,  156. 
Property  at  double  valuation  taken  in  payment  for,  when 

not  fraudulent,  156. 
Receiver  of  insolvent  corporation  may  bring  separate  suit 

to  enforce,  158. 

Bights  of  creditors  and  decisions  of  court,  156. 
Unauthorized,  when  binding,  152. 
When  may  be  enforced,  157. 
Who  can  receive,  152. 
Writing,  need  not  be  in,  153. 

Stranger, 
Dealing  with  corporations  must  take  notice  of  its  powers,  150. 

Superior  court, 
Corporation  dissolved  by,  when,  219. 


218  INDEX  TO  PART  II. 

Surety, 

Corporation  may  become,  when,  136. 

Corporation  cannot  enter  into  contract  of  suretyship,  when, 
136. 

T 

Term  of  office, 

By-laws  fix,  201. 

Statute  does  not  fix,  201. 

Title  of  corporate  office, 

Replevin,  cannot  be  tried  in  action  of,  215. 

Torts, 
Liability  of  corporation  for,  216. 

Transfer  of  stock, 

Creditors  of  corporation,  when  good  against,  176. 
Effect  of,  173. 

Irregular,  when  binding,  176. 

Eemedy  for  refusal  of  corporation  to  transfer  shares,  178. 
Statutory  provisions  requiring  registration,  176. 
Trust,  when  good  in  violation  of,  177. 
When  good  against  corporation,  176. 

Treasurer, 

Duties  of,  208. 
Powers  of,  208. 

Trust  company, 
Capital  stock,  whole  of  necessary  to  be  subscribed,  before 

it  can  do  business,  142. 

Capital  stock,  must  have  $25,000  or  more  according  to  popu- 
lation, 159. 

Cashier  of,  powers  of,  208. 
Face  value  of  shares,  160. 
Liability  of  stockholders,  170. 


INDEX  TO  PART  II.  £19 

Trustees  of  corporation, 

Articles  of  incorporation  set  out  permissible  acts  of,  204. 

Compensation  of  officers  usually  fixed  by  board  of,  126. 

Corporation  can  enter  into  valid  contract  with,  132. 

Corporate  power  exercised  by,  204. 

Dividends,  right  to  declare,  169. 

Election  of,  188. 

Election  of,  place  of  holding,  188. 

Manner  of  voting,  196. 

Names  of,  113. 

Number  of,  113. 

Oath  of,  195. 

Powers  of,  204. 

Proxy,  cannot  vote  by,  196. 

Qualifications  of,  195. 

Quorum  of,  what  constitutes,  197. 

Removal  of,  how  effected,  126. 

Resident  of  state,  at  least  one  in  corporation  must  be,  164. 

Stockholders,  elected  by,  188. 

Stockholders,  two-thirds  vote  of,  necessary  to  remove,  126. 

Term  of  office,  201. 

Term  of  office  of  first  trustees,  113. 

Vacancy  in  board  of,  how  filled,  200. 

Vote  of,  when  can  be  set  aside,  132. 

When  ceases  to  be,  195. 

"When  not  qualified  to  act,  195. 

Trustees'  meetings, 

First  meeting,  how  called,  191. 

Notice  of,  191. 

Notice  of,  failure  to  give  will  not  invalidate  when,  190. 

Publication  of  first,  191. 

Records  of,  199. 

Special,  by-laws  making  provision  for  must  be  followed,  193. 

Special,  notice  must  be  given  of,  193. 


220  INDEX  TO  PART  II. 

Statute  does  not  provide  for  outside  of  state,  194. 
State,  might  be  held  outside  of,  for  what  purposes,  194. 
Time  and  place  of,  194. 

Trust  fund, 

Assets  of  corporation  are,  223. 
Capital  stock  is,  162. 

Trust  relation  of  officers  and  directors, 
Extent  of,  132. 

u 

Ultra  vires, 
Definition  of,  145. 
Reason  for  doctrine  of,  146. 

Ultra  vires  acts. 

Corporation  forfeits  its  charter  by,  147. 

Corporation  forfeits  its  rights  by,  147. 

Eights  of  persons  affected  by,  147. 

State  may  proceed  by  quo  warranto  against  corporation  for, 
147. 

Stockholder  to  obtain  relief  from  must  act  promptly,  140. 
Ultra  vires  contract, 

Corporation  estopped  to  deny  authority  to  make  when,  150. 

Corporation  receiving  and  retaining  benefit  of,  cannot  plead 
ultra  vires,  148. 

Court  will  not  interfere  when  fully  executed,  148. 

Stockholder,  non-consenting,  not  bound  by,  149. 

Void  when  fully  executory,  148. 

V 
Venue  of  actions, 

By  and  against  corporations,  212. 
Vice-president, 

Acts  of,  when  binding,  206. 

Powers  of,  206. 


PART  III 

FORMS  FOR  WASHINGTON 
CORPORATIONS. 


PART  III 

LIST  OF  FORMS. 

1.  Acknowledgment,  form  of 

2.  Agent,  appointment  of  by  foreign  corporation. 

3.  Agent,   appointment   of  by  foreign   fraternal  insurance 

company. 

4.  Articles  of  Incorporation. 

5.  Bank  Statement. 

6.  By-Laws. 

7.  Capital  Stock,  notice  to  increase  or  decrease. 

8.  Capital  Stock,  certificate  of  increase  or  decrease. 

9.  Officers,  list  of. 

10.  Power  of  attorney  to-  vote  shares. 

11.  Principal  place  of  business,  notice  of  removal. 

12.  Stockholders,  notice  of  annual  meeting  of. 

13.  Stockholders,  notice  of  special  meeting  of. 

14.  Stockholders,  record  of. 

15.  Trustees,  notice  of  first  meeting  of. 

16.  Trustees,  notice  of  regular  meeting  of. 

17.  Trustees,  notice  of  special  meeting  of. 

18.  Trustees,  oath  of  office  of. 


224  FORMS 


1. 

FOEM  AND  CONTENTS  OF  ACKNOWLEDGMENTS 
BY  COEPOEATIONS. 

Certificates  of  acknowledgment  of  an  instrument 
acknowledged  by  a  corporation  substantially  in  the  fol- 
lowing form  shall  be  sufficient : 

State  of 

ss. 
County  of 

On  this  .....  day  of  . . . .,  A.  D.  190. .,  before  me  person- 
ally appeared ,  to  me  known  to  be  the  (president, 

vice-president,  secretary,  treasurer,  or  other  authorized 
officer  or  agent,  as  the  case  may  be)  of  the  corporation 
that  executed  the  within  and  foregoing  instrument,  and 
acknowledged  the  said  instrument  to  be  the  free  and  vol- 
untary act  and  deed  of  said  corporation,  for  the  uses  and 
purposes  therein  mentioned,  and  on  oath  stated  that  he 
was  authorized  to  execute  said  instrument,  and  that  the 
seal  affixed  is  the  corporate  seal  of  said  corporation. 

In  witness  whereof,  I  have  hereunto  set  my  hand  and 
affixed  my  official  seal  the  day  and  year  first  above  written. 

(Signature  and  title  of  officer.) 

Sec.  82. 


FORMS  225 

2. 

APPOINTMENT  OF  AN  AGENT  BY  THE 

COMPANY. 

(Foreign  Corporation.) 
To  all  whom  it  may  concern,  notice : 

This  certifies  that  the Company,  a  corpora- 
tion, organized  and  doing  business  under  and  by  virtue 

of  the  laws  of  the  State  of ,  with  its  principal  place 

of  business  in  the  City  of , County,  in  said 

state,  and  whose  principal  place  of  business  in  the  State 

of  Washington  is  in  the  City  of , County, 

has  this  day  appointed ,  of  the  City  of , 

County,  State  of  Washington,  as  its  true  and  law- 
ful agent  and  as  the  agent  upon  whom  service  of  process 
can  be  made  for  service  upon  said  Company,  and  such 
agent  is  hereby  authorized  to  accept  service  of  process  in 
any  action  or  suit  pertaining  to  the  property,  business,  or 

transactions  of  said Company,  within  the  State 

of  Washington,  in  which  the  said  corporation  may  be  a 
party. 

Dated  at , ,  this  ....  day  of ,  A.  D. 

19... 

COMPANY. 

By , 

President. 

(Corporate  seal)  (or  other  chief  officer.) 

Attest. 


Secretary. 

Sec.  55.  A  change  of  agent,  or  a  change  of  the  principal  place  of 
business,  is  made  by  filing  a  new  appointment  reciting  the  change. 

For  appointment  of  agent  of  a  foreign  insurance  company,  see  Sec. 
98. 


15  D 


226  FORMS 


3. 

APPOINTMENT  OF  AGENT  BY  (FOREIGN)  FRA- 
TERNAL INSURANCE  COMPANIES. 
To  all  whom  it  may  concern,  notice : 

This  certifies  that  the Company,  a  fraternal 

insurance  Company,  organized  and  doing  business  under 

the  laws  of  the  State  of ,  with  its  principal  place  of 

business  in  the  City  of ,  in  . . .  .1. .  County,  in  said 

state,  and  whose  principal  place  of  business  in  the  State 

of  Washington  is  in  the  City  of ,  in County, 

has  this  day  appointed ,  insurance  commissioner 

for  the  State  of  Washington,  and  his  successors  in  office, 
to  be  its  true  and  lawful  attorney,  upon  whom  all  lawful 
process  in  any  action  or  proceeding  against  it  may  be 

served,  and  that  said Company  agrees  that  any 

lawful  process  against  it  which  is  served  on  said  agent  or 
attorney  shall  be  of  the  same  legal  force  and  validity  as  if 
served  upon  said  Company,  and  that  the  authority  of 
said  attorney  or  agent  shall  continue  and  be  in  force  so 
long  as  any  liability  remains  outstanding  in  this  state. 

COMPANY. 

(Corporate  seal) 


Attest.  President. 

»•  • » 

Secretary. 


Sec.  97 


FORMS  227 

4. 


ARTICLES  OF  INCORPORATION  OF  THE 

COMPANY. 


We,  the  undersigned  persons,  residents  of  the  State  of 
Washington,  hereby  associate  ourselves  for  the  purpose 
of  forming  a  corporation,  and  for  that  purpose  execute 
these  articles  in  triplicate. 

I. 

The  name  of  this  corporation  shall  be  the   

Company. 

II. 

The  objects  for  which  this  corporation  is  formed  are: 
(Here  set  out  in  full  the  business  to  be  carried  on  by  the 
corporation.) 

III. 

The  capital  stock  of  this  corporation  shall  be 

dollars,  divided  into  shares  of  the  par  value  of 

dollars  a  share. 

IV. 

The  time  of  existence  of  this  corporation  shall  be  (not 
more  than  fifty)  years. 

V. 
The  principal  place  of  business  of  this  corporation  shall 

be  in  the  City  of ,  in  the  County  of ,  in  the 

State  of  Washington. 

VI 

The  number  of  trustees  of  this  corporation  shall  be 

and  the  names  of  the  first  trustees  who  shall  manage  the 
affairs  of  the  company  until  the  (not  less  than  two,  nor 

more  than  six  months)  day  of ,  A.  D.  19. .,  are 

, ,  and 


228  FORMS 

In  testimony  whereof,  we  have  hereunto  set  our  hands 
this day  of ,  A.  D.  19. .. 


State  of  Washington, 

ss. 
County  of  King. 

This  is  to  certify  that  on  this  day  of , 

A.  D.  19 . . ,  before  me,  a  notary  public  in  and  for  the  State 
of  Washington,  duly  commissioned  and  sworn,  person- 
ally appeared ,  ....;..,  and ,  to  me  person- 
ally known  to  be  the  persons  who  executed  the  foregoing 
articles  of  incorporation,  in  triplicate,  and  severally 
acknowledged  to  me  that  they  executed  the  same  freely 
and  voluntarily  and  for  the  uses  and  purposes  therein 
expressed. 

In  witness  whereof,  I  have  hereunto  set  my  hand  and 
official  seal  the  day  and  year  first  above  written. 


Notary  Public  in  and  for  the  State  of 

Washington,  residing  at 

Sec.  24. 


FORMS  229 

5. 

BANK  STATEMENT. 
State  of  Washington, 

S8, 
County  of 

,  being  duly  sworn,  on  oath  deposes  and  says: 

That  he  is  the  (president,  vice-president,  or  cashier)  of 
the Bank,  of ,  Washington. 

That  the  following  is  a  true  and  correct  statement  of 
the  condition  of  said  bank  on  the  first  Monday  of  June, 
A.D.  19... 

(Here  give  a  detailed  statement  of  the  resources  and 
liabilities,  stating  the  amount  of  deposits,  the  aggregate 
loans  and  amount  upon  each  class  of  securities,  and  other 
matters  affecting  the  safety  of  their  deposits. 

Names  of  Addresses  of  No.  of 

Stockholders  Stockholders  Shares 


Officers                                         Names  Addresses 

Trustee  t. . . .  

Trustee 

Trustee  

President  

Vice-President  

Cashier  ,          


(President,  Vice-President,  or  Cashier.) 

of  the Bank. 

.Subscribed  and  sworn  to  before  me  this  ....  day  of 

A.  D.  19...  

Notary  Public  in  and  for  the  State  of 
Sec.  38.  Washington,  residing  at 


230  FORMS 

6. 

BY-LAWS. 

of  the 
... COMPANY. 

1.  Who  are  stockholders. 

Any  person  who  holds  one  share  of  the  company's  stock 
is  a  stockholder. 

2.  Rights  and  duties  of  stockholders. 

A  stockholder  is  entitled  to  one  vote  for  each  share 
of  (paid  up)  stock.  Any  person  has  the  right  to  vote 
his  stock  in  person  or  by  power  of  attorney  but  such 
power  of  attorney  must  be  written  and  witnessed.  Each 
stockholder  shall  have  the  right  to  inspect  the  books  and 
other  records  of  the  Company  at  any  time  but  shall  not  be 
allowed  to  remove  the  books  and  records  from  the  office 
of  the  Company  for  that  purpose.  Each  stockholder  must 
keep  on  file  with  the  Secretary  of  the  Company  his  post- 
office  address,  and,-  in  case  of  his  failure  so  to  do,  he 
waives  his  right  to  notice  of  the  meetings  of  the  stock- 
holders. 

3.  Meetings  of  stockholders. 

Quorum:  (A  majority)  of  the  (paid  up)  stock  shall 
be  necessary  to  constitute  a  quorum  for  the  transaction 
of  business. 

Annual  Meeting  of  Stockholders :  The  annual  meeting 
of  the  stockholders  shall  be  held  at  the  general  place  of 
business  of  the  Company  in  the  City  of ,  Washing- 
ton, at  8  P.  M.  on  the  3rd  Monday  of  the  month  of  Janu- 
ary in  each  and  every  year. 

Special  Meetings :  The  president  of  the  company  shall 
call  special  meetings  of  the  stockholders  when  instructed 
by  the  Board  of  Trustees  to  do  so  or  upon  the  request  of 
the  owners  of  one-third  of  the  paid  up  stock  of  the  Com- 
pany 


FORMS  231 

Notice  of  Meetings:  No  notice  of  meetings  shall  be 
necessary  for  the  annual  meeting  of  the  stockholders  but 
the  secretary  shall  nptify  each  stockholder  by  letter  of 
all  special  meetings,  giving  in  the  notice  a  brief  outline 
of  the  matters  to  come  before  the  meeting.  Such  notices 
must  be  mailed  to  the  stockholders  at  the  address  given 
by  the  stockholders  to  the  Secretary  and  must  be  stamped 
and  mailed  at  least  ten  days  prior  to  the  meeting. 

4.  Officers. 

Officers :  The  officers  of  the  Company  shall  consist  of 
a  President,  Vice-President,  Secretary,  Treasurer,  and 
General  Manager,  but  the  trustees  of  the  Company  may 
create  other  offices.  Any  two  offices  may  be  held  by  one 
person. 

Election  of  Officers:  The  stockholders  shall  elect  the 
Trustees  of  the  Company  at  the  annual  meeting  and  a 
majority  of  the  votes  cast  shall  be  necessary  to  elect.  All 
other  officers  of  the  Company  shall  be  elected  by  the 
Board  of  Trustees  at  its  first  meeting. 

Term  of  Office :  The  officers  of  the  Company  shall  hold 
office  for  a  term  of  one  year  or  until  their  successors 
are  elected  and  qualified. 

5.  Duties  of  officers. 

President:  The  President  of  the  Company  shall  pre- 
side at  all  meetings  of  the  stockholders  and  of  the  Board 
of  Trustees,  shall  sign  all  notes  and  contracts  of  the 
Company,  shall  sign  all  stock  certificates  issued  by  the 
Company  and  generally  do  and  perform  all  duties  that 
usually  devolve  upon  an  officer  in  like  capacity. 

Vice  President:  The  Vice  President  shall  perform 
the  duties  of  the  President  in  the  absence  of  the  Presi- 
dent or  in  case  of  the  inability  of  the  President  to  act. 


232  FORMS 

Secretary :  The  Secretary  of  the  Company  shall  keep 
the  minutes  of  the  meetings  of  the  stockholders  and  of  the 
Board  of  Trustees,  shall  keep  the  books  and  records  of 
the  Company  and  shall  be  custodian  of  the  Company's 
seal  and  shall  affix  the  company's  seal  to  such  instru- 
ments as  is  deemed  proper  by  the  Board  of  Trustees, 
shall  sign  all  contracts  entered  into  by  the  Company, 
shall  sign  all  stock  certificates  and  keep  a  record  of  the 
stockholders  and  a  record  of  the  addresses  of  the  stock- 
holders, as  furnished  by  the  stockholders,  and  generally 
do  and  perform  the  duties  that  devolve  upon  like  officers 
in  like  corporations. 

Treasurer:  The  treasurer  shall  receive  and  keep  all 
moneys  of  the  Company  and  shall  pay  out  the  same  by 
checks  to  be  signed  by  himself  and  one  other  officer  of  the 
Company.  The  treasurer  shall  furnish  a  surety  bond 
for  the  safe  keeping  of  the  funds  of  the  Company  when 
required  to  do  so  by  the  Board  of  Trustees,  such  bond 
to  be  in  such  sum  as  is  determined  on  by  the  Board  of 
Trustees. 

General  Manager:  The  general  manager  shall  be  the 
general  managing  agent  of  the  Company,  and  as  such, 
shall  have  authority  to  make  contracts  for  the  Company 
in  the  ordinary  course  of  business,  and  shall  have  au- 
thority to  do  all  things  necessary  and  proper  to  super- 
vise, manage,  and  care  for  the  business  of  the  Company. 

Trustees:  The  trustees  of  the  Company  shall  have 
general  supervision  over  the  affairs  of  the  Company, 
they  shall  determine  the  form  of  stock  certificates  to  be 
used  by  the  Company  and  shall  regulate  the  manner  of 
transfer  thereof  on  the  books  of  the  Company,  they  shall 
make  expenditures  and  declare  dividends  at  their  dis- 


FORMS  233 

cretion,  except  in  this,  that  dividends  shall  only  be  de- 
clared from  the  net  earnings  of  the  Company. 

6.  Trustees'  meetings. 

Time  of  Meeting:  The  regular  meeting  of  the  retir- 
ing Board  of  Trustees  shall  be  held  at  7  P.  M.  on  the 
date  and  at  the  place  of  the  annual  meeting  of  the  stock- 
holders for  the  purpose  of  closing  .up  the  business  of  the 
retiring  Board  of  Trustees.  There  shall  be  a  meeting 
of  the  new  Board  of  Trustees  immediately  after  the  ad- 
journment of  the  stockholder's  meeting  at  the  same  place 
as  the  stockholders  meeting  was  held  for  the  purpose  of 
electing  officers  and  for  the  transaction  of  such  other 
business  as  may  properly  come  before  the  Board. 

Quorum :  Any  three  trustees  shall  constitute  a  quorum 
for  the  transaction  of  business  and  a  majority  of  the 
trustees  present  at  any  meeting  shall  be  sufficient  to 
decide  any  question. 

Special  Meetings :  A  special  meeting  of  the  Board  of 
Trustees  shall  be  called  by  the  President  upon  request 
of  any  two  members  of  the  board  of  trustees  in  writing. 

Notice  of  Meetings:  No  notice  of  meetings  shall  be 
necessary  for  meetings  fixed  by  the  By-Laws,  but  all" 
trustees  shall  be  given  notice  by  the  Secretary  of  all 
special  meetings  of  the  Board.  Such  notice  can  be  given 
by  letter,  or  any  other  means  but  must  be  given  each 
trustee  a  sufficient  length  of  time  before  the  meeting  to 
allow  him  to  reach  the  place  of  meeting  by  the  usual 
means  of  travel.  The  notice  of  special  meetings  must  in- 
form the  trustee  of  the  business  to  come  before  the  meet- 
ing. 

7.  Amendments. 

These  By-Laws  may  be  amended  by  a vote 

of  the  stock  represented  at  the  annual  meeting  of  the 
stockholders  or  at  any  special  meeting  of  the  stockholders 
called  for  that  purpose. 


234  FORMS 


7. 

NOTICE  TO  INCREASE  (OE  DECREASE)  THE 

CAPITAL  STOCK. 

of  the 

. ., COMPANY. 

To  the  stockholders  of  the Company : 

You  and  each  of  you  are  hereby  notified  that  a  stock- 
holders meeting  of  the  Company  will  be  held 

at  the  principal  place  of  business  of  said  Company  in 
the  City  of ,  County  of ,  State  of  Wash- 
ington, at  the  hour  of  . .  o'clock  . .  M.,  on  the day 

of ,  A.  D.  19. .,  for  the  purpose  of  voting  upon 

the  question  of  increasing   (or  decreasing)   the  capital 

stock  from dollars  to dollars. 

Dated  and  signed  at *  Washington,  this  .... 

day  of ,  A.  D.  19 . . ,  by  the  undersigned,  being 

a  majority  of  the  trustees  of  said Company. 

Company. 

By 

Trustee. 


Trustee. 
Trustee. 


Sees.  42,  43 


FORMS  235 

8. 

CERTIFICATE  OF  INCREASE    (OR  DECREASE) 
OF  THE  CAPITAL  STOCK 

of  the 
COMPANY. 

State  of  Washington 

S3. 

County  of  

(Chairman,)         (Secretary,) 

,       ,  being  each  duly  sworn, 

each  for  himself  deposes  and  says : 

That  they  were  the  Chairman  and  Secretary,  respec- 
tively, of  the  stockholders  meeting  of  the Com- 
pany, held  in  pursuance  of  and  -at  the  time  and  place 
fixed  by  the  notice  of  meeting  attached  hereto,  and  called 
for  the  purpose  of  increasing  (or  diminishing)  the  capi- 
tal stock  of  the  said Company. 

That,  at  said  meeting, shares  of  stock,  being 

more  than  two-thirds  of  all  the  shares  of  stock  of  said 

Company,  were  represented  and  took  part  in 

said  meeting  and,  after  said  meeting  had  been  duly  called 
to  order  and  a  vote  was  had  to  increase  (or  decrease) 

the  capital  stock  of  said Company,  from 

dollars  to  ..<....   dollars,   shares  of  the  stock 

of  said  Company,  voted  in  favor  of  the  increasing  (or 

decreasing)  the  capital  stock  of  said Company 

from dollars  to dollars,  and  the  num- 
ber of  shares  voting  in  favor  of  such  increase  (or  de- 
crease) are  more  than  two-thirds  of  the  whole  number 
of  the  shares  of  stock  in  said Company. 

That  the  following  is  a  true  and  correct  statement  of 
the  condition  of  said  ,  Company  at  this  date, 


236  FORMS 


to-wit :  Amount  of  capital  actually  paid  in dol- 
lars. 

The  whole  amount  of  debts  and  liabilities  of  said  Com- 
pany is dollars. 

The  amount  to  which  the  capital  stock  of  said  Com- 
pany is  to  be  increased  (or  decreased)  is dollars. 


Chairman  of  the  above  described  meeting. 


Secretary  of  the  above  described  meeting. 

Subscribed  and  sworn  before  me  this    ....    day  of 
.A.  D.  19. . 


Notary  Public  in  and  for  the  State  of  Washington,  re- 
siding at 

We  the  undersigned,  being  a  majority  of  the  trustees 

of  the Company,  hereby  certify  that  the  above 

is  a  true  and  correct  statement  of  the  proceedings  of  the 

above  described  meeting. 


Trustee  of  the Company. 

Trustee  of  the Company. 

Trustee  of  the Company. 


Sec.  44 


FORMS  237 

9. 

LIST  OF  OFFICEKS. 

of  the 
COMPANY. 

State  of  Washington, 

County  of 

being  duly  sworn,  on  oath,  deposes  and  says : 

That  he  is  the  President  of  the  ........  Company,  a 

corporation,  with  its  principal  place  of  business  in  the 

City  of , County,  State  of  Washington, 

and  was  elected  such  President  on  the day  of , 

A.  D.  19. .,  to  serve  until  the day  of A.  D.  190. .. 

That  the  following  is  a  true  and  correct  list  of  the  offi- 
cers of  the  said  . ., Company,  with  their  respective 

titles  of  office,  their  names  and  addresses. 

Officers  Names  Addresses 

Trustee  

Trustee  

Trustee  

President  , 

Vice-President  

Secretary 

Treasurer 


That  all  of  said  officers  were  elected  at  the  same  time 
and  for  the  same  term  as  the  affiant. 


Subscribed  and  sworn  to  before  me  this  . . .  day  of 

A.  D.  19... 

(Corporate  seal.)  

Attest.  Notary  Public  in  and  for  the 

State  of  Washington,  re  siding 

Secretary,     at 

Sec.  26. 


238  FORMS 

10. 

POWER  OF  ATTORNEY  TO  VOTE  SHARES. 

I ,  of  the  city  of , County, 

State  of ,  hereby  nominate  and  appoint of 

the  city  of , County,  State  of ,  my 

true  and  lawful  attorney,  for  me  and  in  my  place  and 

stead,  to  vote  all  shares  of  stock  held  by  me  in  the 

Company,  at  the  regular  and  special  meetings  of  the 
stockholders  of  said  Company  until  this  power  of  attor- 
ney is  revoked  by  me  in  writing. 

Dated  at , this  ....  day  of 

A.  I).  19... 

Signed  in  presence  of 


Sec.  29. 

11. 

NOTICE  OF  REMOVAL  OF  PRINCIPAL  PLACE  OF 

BUSINESS 
of  the 

COMPANY. 

To  whom  it  may  concern : 
Notice  is  hereby  given  that  on  or  about  the  ....  day 

of ,  A.  D.  190 . . ,  the  principal  place  of  business 

of  the Company  will  be  removed  from  the 

City  of  ,  in  County,  State  of  Wash- 
ington, to  the  City  of ,  in  said  County  and  State. 

Company. 

(Corporate  seal.) 

By 

Secretary. 

Sec.  47. 


FORMS  239 


12. 

NOTICE  OF  ANNUAL  MEETING, 
of  the 

STOCKHOLDEES  OF  THE COMPANY. 

To  the  Stockholders  of  the  .  .1 Company: 

You  and  each  of  you  are  hereby  notified  that  the  annual 

meeting  of  the  stockholders  of  the   Company 

will  be  held  at  the  office  of  the  company,  in  the  City  of 

, : . .  County,  State  of  Washington  on  the 

. . .  .day  of ,  A.  D.  19. .,  at  the  hour  of 

o'clock,  . .  M. 

You  are  further  notified  that  the  following  matters  will 
be  considered  and  acted  upon  at  this  meeting  (here  set 
out  any  matters  of  unusual  importance  to  come  before 
the  meeting.) 

Dated  at ,  Washington,  this  . . .  day  of , 

A.  D.  19... 

Company. 

By 

Secretary. 


240  FORMS 

13. 

NOTICE  OF  A  SPECIAL  MEETING  OF  THE  STOCK- 
HOLDEES  OF 

COMPANY. 

To  the  Stockholders  of Company. 

You  and  each  of  you  are  hereby  notified  that  there 

will  be  a  special  meeting  of  the  stockholders  of  the 

Company,  at  the  office  of  the  Company  in  the  city  of 

, County,  in  the  State  of  Washington, 

at  the  hour  of  ...  o  'clock  . .  M.,  on  the  . . .  day  of 

A.  D.  19. .,  for  the  purpose  of  (Here  set  out  in  full  the 
matters  to  be  considered  at  the  meeting). 

Dated  at ,  Washington,  this  . . .  day  of 

A.D.  19... 

Company. 

By 

Secretary. 


14. 
EECOED  OF  STOCKHOLDEES. 

Names  No.  of  Shares  Time  When  Shares  Acquired 

A. 

day  of A.  D.  19... 

day  of  ....  A.  D.  19. .. 

B. 

...day  of  ....  A.  D.  19... 

day  of A.  D.  19... 

C. 

. . day  of A.  D.  19... 

day  of  ....  A.  D.  19. .. 

Sec.  40 


FORMS 


241 


15. 


NOTICE  OF  FIRST  MEETING  OF  THE  BOARD  OF 

TRUSTEES. 

of  the   COMPANY. 

To  the  trustees  of  the Company : 

You  and  each  of  you  are  hereby  notified  that  the  first 
meeting  of  the  Board  of  Trustees  of  the Com- 
pany will  be  held  at  No , street,  in  the  City 

of ,  County,  State  of  Washington,  at 

the  hour  of  ...  o'clock  . .  M.,  for  the  transaction  of  any 
business  that  may  come  before  this  meeting. 

Dated  at ,  Washington,  this  . . .  day  of 

A.  D.  19...  

Trustee  of  the Company. 


Sec-  32-  Trustee  of  the Company. 


242  FORMS 


16. 

NOTICE  OF  A  REGULAR  (OR  THE  ANNUAL) 

MEETING. 

of  the 

BOARD  OF  TRUSTEES  OF  THE COMPANY. 

To  the  trustees  of  the Company : 

You  and  each  of  you  are  hereby  notified  that  a  regular 
(or  the  annual)  meeting  of  the  Board  of  Trustees  of  the 
i  Company  will  be  held  at  the  office  of  the  Com- 
pany, in  the  City  of ,  County,  in  the 

State  of  Washington,  at  the  hour  of  ...  o  'clock  . .  M., 

on  the  . . .  day  of   ,  A.  D.  19 . . .,  for  the  purpose 

of  transacting  such  business  as  may  properly  come  be- 
fore the  meeting. 

You  are  further  notified  that  (Here  set  out  any  matters 
of  unusual  importance  to  come  before  the  meeting.) 

Dated  at  ..........  "Washington,  this  . . .  day  of 

A.  D.,  19... 

Company. 

By ,  Secretary. 


FORMS 


243 


17. 

NOTICE  OF  A  SPECIAL  MEETING  OF  THE  BOARD 
OF  TEUSTEES. 

of  the 
COMPANY. 

To  the  trustees  of  the Company : 

You  and  each  of  you  are  hereby  notified  that  there 
will  be  a  special  'meeting  of  the  Board  of  Trustees  of  the 

Company,  at  (Here  state  place  of  meeting),  in 

the  City  of ,   County,  in  the  State  of 

Washington  at  the  hour  of  ...  o  'clock  . .  M.,  on  the  . . . 
day  of  ...  A.  D.  19. ..  for  the  purpose  of  (Here  set  out 
the  matters  to  be  considered  at  the  meeting.) 

Dated  at  ,  Washington,  this  . . .   day  of  ... 

A.  D.  19... 

Company. 

By 

Secretary. 


244  FORMS 


18. 

TRUSTEE'S  OATH  OF  OFFICE. 

State  of  Washington, 

ss. 

County  of  

,  being  duly  sworn,  on  oath  deposes  and  says : 

That  on  the  . . .  day  of  . . . ,  A.  D.  19 . . .,  he  was  duly 

and  regularly  elected  a  trustee  of  the Company, 

a  corporation  with  its  principal  place  of  business  in  the 

city  of ,  in  the  County  of ,  and  State 

of  Washington,  to  serve  as  such  trustee  until  the   . . . 
day  of  ....,  A.  D.  19... 

That  he  will  faithfully  and  conscientiously  perform  all 
the  duties  of  his  said  office  as  such  trustee. 


Subscribed  and  sworn  to  before  me  this  . . .  day  of. 
A.  D.  19.. 


Notary  Public  in  and  for  the  State  of  Washington,  re- 
siding at 

Sec.  29. 


